Are a command and mixed economy, productively and alloctively efficient?
Efficiency in economics is usually related to pareto efficiency. In simple terms, a system is pareto optimal when it is not possible to change it to make someone better off without making someone else worse off. Productive efficiency simply means the economy is producing at the minimum possible cost. That is each firm is at the minimum point of their Long Run Average (Total) Cost Curve. Producing more or less would cost more per unit.. Allocative efficiency simply means that economy produces such the resources are allocated properly, Price value imposed by society = Marginal Cost, cost to produce. These conditions are met in perfect competition only. Moving to a more macro economic framework, as long as you are ON the production possibilities frontier (PPF), then you are productively and allocatively efficient such that you can’t produce more of the 2 goods to make at least some better off without making others worse off. The third concept that brings it all together is distributive ef
