The allocation of resources Flashcards
What is Allocative efficiency ?
When resources are allocated to the best interests of society, maximum social welfare and utility P=MC
What is Economic efficiency?
when resources are allocated optimally so every consumer benefits
An incentive is …
Something that motivates someone to act a certain way
What is a Market economy?
Market mechanism, consumers make decisions about what is produced
Mixed economy is …
Both the free market mechanism and the government allocate resources
What is a planned economy ?
All FOP are allocated by the state so they have decision of how and whom to produce goods
What is productive efficiency?
Resources are used to give max output at lowest cost: MC=AC
Resource allocation is …
How resources and goods are distributed
What is a mixed economy ?
Features of both planned and market economies, controlled by government and supply and demand
