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CAIE A-Level Economics A2 7.3.1 Productive and Allocative Efficiency Questions

Practise explaining allocative and productive efficiency, welfare losses and why economies seek to avoid wasted resources in A2 questions.

Syllabus
2026–2028
Course
Economics 9708
Level
A2

Exam points

  • Explain economic efficiency, including allocative and productive efficiency, welfare and resource use.

CAIE A-Level Economics A2 7.3.1 Productive and Allocative Efficiency Questions question 1

[Maximum number: 1]

The diagram shows a production possibility curve (LM) for an economy producing agricultural goods and manufacturing goods.

Figure for Question CAIE A-Level Economics A2 7.3.1 Productive and Allocative Efficiency Questions question 1 — CAIE A-Level Economics A2

What can be concluded from the diagram?

A

The economy must be allocatively efficient at point R.

B

The economy is Pareto efficient at point T.

C

The economy is productively efficient at point S .

D

The opportunity cost is constant as we move from L to M.

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