Practice: Markets and Efficiency

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Wize University Microeconomics Textbook > Economic Efficiency and Government Intervention

Production and Allocative Efficiency

3 Activities

 ______________ market structure leads to productive efficiency and a _______________ market structure leads to allocative efficiency.

More Production and Allocative Efficiency Questions:

allocative efficiency

In productive efficiency every firm at industry level has the same 

Suppose there are two companies burning coal to generate electricity. The electricity generated is sold to the consumers, however coal burned generates a lot of smog pollution. 
The marginal costs of abatement for both firms are: 
MC1=10Q1MC_1=10Q_1MC1​=10Q1​ and MC2=3Q2+15MC_2=3Q_2+15MC2​=3Q2​+15 

Suppose there are two companies burning coal to generate electricity. The electricity generated is sold to the consumers, however coal burned generates a lot of smog pollution. 
The marginal costs of abatement for both firms are: 
MC1=10Q1MC_1=10Q_1MC1​=10Q1​ and MC2=3Q2+15MC_2=3Q_2+15MC2​=3Q2​+15 