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the dynamically efficient allocation( say for a good consumed over two periods will be satisfied under...

the dynamically efficient allocation( say for a good consumed over two periods will be satisfied under the condition which

a. the net benefit received in the 2 time periods is maximized

b. the net benifit in period one is maximised and the remaining resources are allocated to period 2

c. non of the above

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Answer #1

Option A.

  • The dynamically efficient allocation will be satisfied under the condition in which the net benefit received in the 2 time periods is maximized.
  • Dynamic efficiency refers to the efficient allocation of resources by considering two time periods which helps in balancing the present and past requirements of a depleted resource.
  • According to dynamic allocation, to maximize the allocation efficiency it would be better to allocate resources equally to both the time periods in such a way that it maximizes the net benefit between those two periods.
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