Classify cach statement as describing productive efficiency, allocative efficiency, or a situation that is inefficient. Flour, which can be used to make many products, is used to make waffles and muffins because of the high demand for each product. To produce one more bagel, the output or donuts must fall. Herb Farmer decides to use his flour and sugar to make three cakes and three loaves of bread, which his customers have demanded. Herb Farmer makes two cakes and two loaves of bread but uses enough flour to make three cakes and four loaves of bread. If Herb Farmer wants to produce one more cake, he needs to give up two loaves of bread. Herb Farmer decides to use his ingredients to make cakes, but his customers prefer donuts.

Respuesta :

Productive efficiency: Flour is being used to make the highest value products given the resources and technology available.

Allocative efficiency: The products being made (waffles and muffins) reflect the high demand for each product.

Inefficient: Herb Farmer is using more resources (flour and sugar) than necessary to produce the same number of cakes and loaves of bread.

Inefficient: Herb Farmer is making products that his customers do not prefer (cakes) rather than products they do prefer (donuts).

What is productive efficiency, allocative efficiency, or a situation that is inefficient.?

Productive efficiency: Given the resources and technology that are at hand, flour is being utilized to manufacture the things that have the greatest potential value.

The waffles and muffins that are being produced are a reflection of the great demand for each individual product. Allocative efficiency.

Ineffectiveness on the part of Herb Farmer, who employs an excessive amount of resources (including wheat and sugar) in order to generate the same quantity of baked goods and bread.

Herb Farmer is operating in an inefficient manner since he is producing goods (cakes) that his consumers do not like rather than goods that they do enjoy (donuts).

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