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Allocative efficiency means that a good’s output is expanded until its marginal benefit and marginal cost are equal. Microeconomics ultimate cheat sheet formulas utility maximizing rule: Nudges are created by choice architects using small prompts or tweaks to alter social and economic behaviour, but without taking away the power for people to choose. Formula sheet microeconomics allocative efficiency condition p.
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Allocative efficiency means that a good’s output is expanded until its marginal benefit and marginal cost are equal. Formula sheet microeconomics allocative efficiency condition p = mc, or more precisely, marginal social benefit (msb) = marginal social cost (msc) average fixed cost afc=. No resources beyond that point should be allocated to. Microeconomics ultimate cheat sheet formulas utility maximizing rule: