Ano ang Allocative Efficiency

Ano ang allocative efficiency?

Hindi mo maiintindihan si Allocative Efficiency unless you have background with both concepts of Marginal Cost and Marginal Benefit. 

Now, what is this marginal cost and marginal benefit that I am talking about here?

When we say marginal cost, for example, you have bought 1 kilogram of mangoes (mahilig kasi ako sa mangga at avocado) Pero sa tingin mo… Gagawa ka ng shake pero parang ine-estimate mo na parang kukulangin so, “Pahingi pa nga po ng isang piraso ng mangga,”so ‘pag sinabi nating marginal cost, that is the amount needed to purchase another unit of the good that you are interested to buy. Are you with me? Ayun ýung halaga ‘nung magugugol mo sa pagbili ng isa pang piraso nung bagay na gusto mong bilhin. Ýun ýung, for every additional unit na gustuhin mong bilhin ang tawag ‘don ay marginal cost. Gets hinde?

Ang marginal benefit naman is the amount of satisfaction that you can get in purchasing another unit of the good you wanted to purchase. Na gets nýo? Parang ganito, umakyat ka ng fourth floor, educ, uminom ka, e kulang, bumili ka pa ulit ng isa pang bote ng tubig at ininom mo pati bote. That the amount of satisfaction that you can get in drinking another bottle of water is the marginal benefit.

So ibig sabihin, paano kino-compute ýung marginal benefit? To compute for that marginal benefit, all you have to do is just to know the amount that the buyer is willing to spend in buying another unit of good. Ýung halaga na willing gastusin ng tao, kung willing sýa ah, na gastusin kahit mahalan mo pa ýung o taasan mo pa ýung presyo eh dahil gusting gusto mong bilhin kahit na gawin mo pang million ýun, ang pinag uusapan ditto ay yung willingness mo na bilhin just to have it again that is marginal benefit.

Ganoon sinusukat ang marginal benefit. Ýung halaga na gustuhin mong gastusin makuha mo lang ýung isa pang unit. Isa pa, isa pa. Nag enjoy ka sa serbisyo ng manggugupit e sa susunod na magpapagupit ka na, e ginawang singkwenta o tatlong daan, e nasiyahan ka kasi mahusay sýang manggupit e. Mukha kang demonyo, nang magupitan ka nagmukha kang anghel. Edi syempre kahit 300 pa yun, pinatungan ng 250 e, kung paglabas mo naman mukha kang anghel e papatusin mo. Are you getting my point? Aba kahit na gawi mong 1000 ýan papatulan yang serbisyo mo. Ang tawag dun sa halaga na gusto mong gastusin makuha mo lang ýung isa pa e marginal benefit.

Ngayon, Where is allocative efficiency? Ang allocative efficiency is actually the point where the marginal cost and marginal benefit intersects. Are you with me? Kung saan nag tagpo , ýun yung punto ng tagpuan. Parang nag-date, magjowa, doon nagkita, ayun na ang allocative efficiency. Ýung punto kung saan nag cruise ang landas ni marginal benefit at marginal cost.

The most wanted point in the production possibility curve  is actually the point of allocative efficiency. Ang tanong, why is it that the point of allocative efficiency is the most wanted point in the PPF curve. Why? Kasi sa point of allocative efficiency the resources are most efficiently used in such a way that you produced the equal number of quantity of the same goods. Halimbawa, three yung foods, three din ýung machines. Are you getting my point? Of equal number ýung quantity ng parehong goods, are you with me? Kaya kung baga, win-win, are you with me? Nakuha o hinde?

Pag-usapan naman natin ang Economic Growth.

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Economic Growth

May palatandaan ang Economic Growth. Ano ang palatandaan? Dalawa! Capital Accumulation and Technological change.

Ano ang Capital Accumulation? Kapag sinabi nating Capital Accumulation, nag-i-increase, for example, 'yung resources. At kasama sa resources hindi lang 'yung raw materials kundi isinama na rin 'dun sa pagkakataong iyon pati 'yung human resources. Both 'yung natural resources and human resources.

 So, what else could we expect if there is an increase in natural and human resources? There would be an increase in what?

Production! Which is positive to an economy.

Now, the other one is Technological Change. What about Technological Change? How can it improve of the economy of the given country? And how can technology improves the production in such a way that it would result to an economic growth?

Well, to tell you frankly, for example panahon nila David Recardo, and tao ay kayang magproduce ng apat na pins in a day. Needle. Mahirap palang gawin 'yun kasi nga maliit. Ngayon, 'nung maimbento ang machines dumami 'yung needles pero more than that mas bumilis 'yung production.

I remember 'nung grade 5 ako, kasi may subject... magaling kasi 'yung teacher namin sa Science. Sa kanya ko natutunan na "What is simple machines?" Machines are the devices that make work faster and easier. Kaya hindi ko 'yan makalimutan. Kapag nagtawag 'yan e lagot ka 'pag 'di ka nakasagot.

And since machines can make work faster and easier, that lead to mass production of goods and services in 19th century. The first industrial revolution ever in the world.

And because of that, anong nangyari? Mass production. Positive to an economy. Mass production 'yan dahil dun sa Capital Accumulation, na kapag pinagsama, Economic Growth.

                              Halimbawa ito ng Balance and Imbalance Economic Growth.


Now, bakit balance? Bakit 'yung isa imbalance? Anong nangyari?

If one or two or some sectors of an economy benefited from the economy, there is an Imbalance Economic Growth kasi ilan lang ang nakikinabang.

Pero, if every given sectors of an economy benefited from the economy, that's the time, Balance.

Don't forget it. Kapag ilang sector lang ang nakikinabang, that would result to an Imbalance Economic Growth. Whereas all given sectors of an economy benefited from such, then that is Balance Economic Growth.

Anong ibig sabihin nito?

Kapag nag move ang curve to the right, 'pag mayroong outward shift, in other words the curve moves from left going to the right, it is a sign of Economic Growth.

Why?

Because an additional curve suggests that there is an increase in resources and technology. So, mas marami ka ma-i-po-produce. Kasi dati hanggang dun lang (PPF 1) Ang movement ay going to the right, positive 'yan. May Economic Growth.

Pero, 'pag ang movement ay from right going to the left. Kapag may inward shift, ano ang sina-suggest n'yan? May Economic Shrinking na nagaganap. Decline in the performance in an Economy.

Can you follow?

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