Question

Through the Edgeworth Box, neoclassical economics harmonized the allocative and distributive efficiencies and established one without the other does not exist. Discuss, as seen by the (neo)classicals) the allocative and distributive efficiencies as they relate to (complement) each other.

Please provide a paragraph to explain it.

Answer 1

Economic efficiency is a situation in which nothing can be improved without something else being hurt, allocative or pareto efficiency any changes made to assist one person would harm another. Productive efficiency no additional output of one goods can be obtained without decreasing the output of another good and production proceeds at the lowest possible average total cost. A market or other economic system may be allocatively but not productively efficient, productive resources are scarce the resources must be allocated to various industries in just the right amounts otherwise too much or too little output gets produced.Distributive efficiency occurs when goods and services are recieved by those who have the greatest need for them.