Discussion 5

Compare and contrast production efficiency and allocative efficiency. (4 points)
When a forest is logged, it is possible for the logging to create “soil runoff,” a situation in which the soil, no longer protected by trees, erodes and silts a river downstream from the logging area. Is soil runoff created by logging in Montana that ruins a river an example of a private cost to the lumbering company or an external cost? Explain. (3 points)

Solution Preview

Discussion 5
Productive efficiency and allocative efficiency are two terms that are used in management to determine the efficiency of the organizational processes. Productive efficiency is concerned about coming up with the best methods that can be used to produce goods and services.

(321 words)