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A Level Economics:

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I would like to know why : The point of allocative efficiency is deemed to exist when the price of a product is equal to its MC.
 
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I would like to know why : The point of allocative efficiency is deemed to exist when the price of a product is equal to its MC.
This basically depends on the type of market structure a firm is operating in. In case of Imperfect market structure, point of allocative efficiency would not exist under any circumstances as the producer in an imperfect market would always prefer to produce at the profit maximizing level of output, which is MC = MR.
ab profit.png
This would be true in case of both short-run and in the long-run as the producers would never tend to produce at allocative efficiency which is MC = AR until the government subsidies the firm (which is a totally different case)

However, in case of perfect market structure, the allocative efficiency is achieved in case of long run, as in the long run, the firm is earns normal profit.
Graphically, this can be proven:
perfect market.png
Now we can see that both in abnormal profit and loss, which occur in short-run, the firm does not achieve allocative efficiency, however, in the long run, the firm is indeed allocative and productive efficient which means it's economically efficient.
So conclusively, we can say that the firm would only be allocative efficient in case in long run in the perfect market structure.

I hope it helps. :)
 
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Is there any website or link where I can download the AS and A level economics book or CD ROM ?Please help me.
 
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Is there any website or link where I can download the AS and A level economics book or CD ROM ?Please help me.
 
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Is there any website or link where I can download the AS and A level economics book or CD ROM ?Please help me.
 
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Is there any website or link where I can download the AS and A level economics book or CD ROM ?Please help me.
 
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  • Result for Nov 2013 attempt is going to be announced on 24th Jan 2014. I wish all of you very best of luck!
 
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Does anyone have the TOPICAL past paper questions for A2 economics for easier revision. It would be of great help.
 
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please upload oct/nov 2013 9708/32 answers.
u have uploaded paper 12 answers but u did not uploaded paper 32 answers.
please upload it as soon as possible
 
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