Points on the PPF curve are the only ones that achieve "productive efficiency". 2) Which of the following are true about productive efficiency? Efficiency. In a market-oriented economy with a democratic government, the choice will involve a mixture of decisions by individuals, firms, and government. IV. Knowing the difference between productivity and efficiency will help you understand the how the performance of the company is measured. Productivity is generally regarded as a measure of outputs divided by inputs. The output of productive efficiency occurs when a business in a given market or industry reaches the lowest point of its average cost curve implying an efficient use of scarce resources and a high level of factor productivity. This occurs on the lowest point of the AC curve. Allocative efficiency occurs where P = MC. Located in Lincoln NH near Loon Mountain. Efficiency is a measure of how well you do those things. 2. Productivity. Productive efficiency (or production efficiency) is a situation in which the economy or an economic system (e.g., a firm, a bank, a hospital, an industry, a country, etc.) Allocative efficiency . All of the activities that you get done in a day may be considered your output and the time you put into them are your inputs. When scarce resources are allocated according to consumer preferences at a price equal to marginal cost . Productive efficiency . Learn vocabulary, terms, and more with flashcards, games, and other study tools. Dynamic efficiency While efficiency is all about working smarter, to get more out of less, productivity nothing but increasing the overall yield, and this is possible by raising the performance level, to achieve greater results. Penguin Ski Club of New Hampshire. 3. The mix of goods produced and their distribution to consumers maximizes customer satisfaction. could not produce any more of one good without sacrificing production of another good and without improving the production technology. III. The study of economics does not presume to tell a society what choice it should make along its production possibilities frontier. Productive efficiency similarly means that an entity is operating at maximum capacity. Menu and widgets II. Efficiency. Production efficiency may also be referred to as productive efficiency. I. Productive Efficiency. This happens at Q1. This is because firms produce at the lowest point on the AC. In this case, the firm will be allocatively efficient because at Q1 P=MC. When a firm is operating at the lowest point of their average cost curve in the short or the long run. All available resources are employed in production. X efficiency. Workers are well-paid. 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