Why all points on the boundary are productively efficient but not all points on the boundary are allocatively efficient
Every point on the PPC boundary uses all available resources without waste — that is productive efficiency. But only one point produces the exact mix of goods that best matches what society actually wants — that is allocative efficiency.
Real World
The Soviet Union in the 1980s was productively efficient by some measures — factories ran at full capacity — yet allocated the vast majority of resources to military goods rather than consumer goods, so it was allocatively inefficient relative to what citizens actually wanted.
Exam Focus
Distinguish the two efficiencies explicitly: state that productive efficiency concerns waste, allocative efficiency concerns consumer welfare — conflating them loses marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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