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. All available resources are employed in production. I. 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. 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.) Menu and widgets Allocative efficiency . When a firm is operating at the lowest point of their average cost curve in the short or the long run. In a market-oriented economy with a democratic government, the choice will involve a mixture of decisions by individuals, firms, and government. Workers are well-paid. could not produce any more of one good without sacrificing production of another good and without improving the production technology. II. Knowing the difference between productivity and efficiency will help you understand the how the performance of the company is measured. Productive efficiency is closely related to the concept of technical efficiency. Production efficiency may also be referred to as productive efficiency. Productive efficiency . The study of economics does not presume to tell a society what choice it should make along its production possibilities frontier. 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. This is because firms produce at the lowest point on the AC. This occurs on the lowest point of the AC curve. X efficiency. Penguin Ski Club of New Hampshire. Located in Lincoln NH near Loon Mountain. Efficiency. Productive efficiency similarly means that an entity is operating at maximum capacity. Productive Efficiency. 2. Allocative efficiency occurs where P = MC. This happens at Q1. Dynamic efficiency Efficiency. The mix of goods produced and their distribution to consumers maximizes customer satisfaction. IV. Start studying 3.1 Food supply, Plant growth and Productivity. Economic efficiency - key concept summary. 3. When scarce resources are allocated according to consumer preferences at a price equal to marginal cost . 2) Which of the following are true about productive efficiency? In this case, the firm will be allocatively efficient because at Q1 P=MC. III. tutor2u partners with teachers & schools to help students maximise their performance in important exams & fulfill their potential. 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