Allocative efficiency is an economic concept that occurs when resources are distributed in a way that maximizes the net benefit to society. It reflects a situation where goods and services are produced according to consumer preferences, and marginal cost equals marginal benefit.
Economic efficiency refers to the optimal allocation of resources where they are most valued and the production and distribution of goods and services occurs at the lowest possible cost. It ensures that no further improvements can be made in one person's well-being without making someone else worse off.
The Utility Possibility Frontier (UPF) is a curve on a graph that illustrates the maximum utility levels that two different consumers can achieve given a fixed amount of resources and technology, highlighting the trade-offs in redistributing resources.
