Allocative Efficiency
Definition
Allocative efficiency refers to an economic state where resources are allocated in such a way that maximizes overall societal welfare or utility.
Related terms
Productive Efficiency: Productive efficiency occurs when goods or services are produced at their lowest possible cost.
Marginal Benefit: Marginal benefit is the additional satisfaction or utility gained from consuming one more unit of a good or service.
Externalities: Externalities refer to costs or benefits that affect individuals not directly involved in an economic transaction.
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