Abstract
The efficient use of resources is the major focus of economics. For historical and other reasons, this means primarily the allocation of resources by prices and markets. The term allocative efficiency means the efficiency with which markets allocate resources among their competing uses. Allocative efficiency exists when perfectly competitive firms price their output at marginal cost, and hence when the industry produces the socially optimum rate of output (SORQ).
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© 1997 Springer Science+Business Media New York
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Frantz, R.S. (1997). Production, Cost, and Welfare: A Review. In: X-Efficiency: Theory, Evidence and Applications. Topics in Regulatory Economics and Policy Series, vol 23. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-6265-8_2
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DOI: https://doi.org/10.1007/978-1-4615-6265-8_2
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