CAIE A-Level Economics 7.3.2 Productive & Allocative Efficiency

CAIE A-Level Economics 7.3.2 Productive & Allocative Efficiency
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise locating productive and allocative efficiency on cost–revenue diagrams and explaining the underlying conditions.

How this is tested

  • locate allocative efficiency where price or average revenue equals marginal cost
  • locate productive efficiency at the minimum point of the average-cost curve
  • apply efficiency conditions to competition, monopoly or nationalised-firm diagrams

Question 2

[Maximum number: 1]

When is allocative efficiency achieved?

A

when a perfectly competitive market is in equilibrium

B

when everybody who needs the product can obtain it

C

when firms produce at the lowest possible cost

D

when monopolistic firms make normal profits