What's the difference between 'productive efficiency' and 'allocative efficiency'?

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Brian Moser
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#1
I've got a definition for each of these written in my book, but I seem to recall being told that they were incorrect. Does this sound right to you:
- Allocative Efficiency occurs where MR=MC
- Productive Efficiency occurs are the level of output where Average Cost in minimised.

Thanks in advance
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Scratchyjam
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(Original post by Brian Moser)
I've got a definition for each of these written in my book, but I seem to recall being told that they were incorrect. Does this sound right to you:
- Allocative Efficiency occurs where MR=MC
- Productive Efficiency occurs are the level of output where Average Cost in minimised.

Thanks in advance
Allocative efficiency definition is wrong. It occurs where P=MC. MC=MR is the point at which a firm profit maximises

Productive efficiency one is correct
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gr8wizard10
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(Original post by Brian Moser)
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Allocative efficieny : Refers to a situation in whereby Price = Marginal revenue (P=MC)

Allocative efficiency is achieved when the value consumers place on a good or service (reflected in the price they are willing to pay) equals the cost of the resources used up in production. Condition required is that price = marginal cost. When this condition is satisfied, total economic welfare is maximised
http://www.tutor2u.net/economics/con...efficiency.htm

Productive efficiency : Refers to the point where Marginal Cost = Average Cost (MC=AC)

Productive efficiency is achieved at the lowest point of the average cost curve. It refers to the lowest point on its average cost curve in which a firm can maximize it's outputs with the least amount of inputs. Productive efficiency exists when producers minimise the wastage of resources in their production processes.
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