Productive Efficiency & Allocative Efficiency - Economy UPSC Notes

🌟 1. Productive Efficiency Meaning: Productive efficiency happens when a company or economy produces goods using the least amount of resources (like time, money, and raw materials). It means "no waste" in production. Example: Imagine a bakery can make 100 cakes a day using 5 workers. If they find a way to make the same 100 cakes using just 4 workers and the same ingredients, they have become productively efficient — less input, same output. In short: Best use of resources Lowest cost of production No one can produce more without using more resources 🌟 2. Allocative Efficiency Meaning: Allocative efficiency happens when the right amount of goods is produced as per people's needs or desires . It means the economy produces what people actually want . Example: Suppose people in a town want more bread than cake. If the bakery spends more time making cake instead of bread, it is not allocatively efficient . But if the bakery adjusts and starts baking more bread (what people want), it be…