What is allocative efficiency and how does it effect our economy?

Answer by  RaeK (36)

Allocative efficiency is when all resources are used to produce the maximum output. It can also be defined as the maximum output using a given amount of resources. If allocative efficiency is present in an economy then the economy is operating the best it can.

Answer by  tamarawilhite (17883)

Allocative efficiency is the speed and efficiency at which resources are allocated. Where there is a greater profit margin or greater demand, the market allocates more money and labor and materials to those areas. Allocative efficiency measures the flow as those resources are reallocated to new areas.

Answer by  tamarawilhite (17883)

Allocative efficiency is when all products and services are produced at the level of demand. There are no shortages, there are no excesses, and this reduces waste. Allocative efficiency is the goal of all businesses, since unmet demand is a loss of profit and excess production wastes money.