How to determine what a society desires can be a controversial question, and is usually a discussion in political science, sociology, and philosophy classes as well as in economics. At its most basic, allocative efficiency means producers supply the quantity of each product that consumers demand. Only one of the productively efficient choices will be the allocatively efficient choice for society as a whole.
Allocative efficiency
Allocative efficiency means that the particular combination of goods and services on the production possibility curve that a society produces represents the combination that society most desires.
Source & attribution
Principles of Economics 3e — The Production Possibilities Frontier and Social Choices
OpenStax contributors · OpenStax, Rice University
CC BY 4.0. Text excerpted; whitespace normalised and empty cross-references removed; learning prompts added. No illustrations reproduced.
Source edition: 2024-07-18T12:52:27Z
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