If the production of a particular product is more cost effective than other alternatives, then society will have the tendency to allocate more resources to the production of that product. This is because the value of the additional units produced will be more than the value of the other products. But, if the resources are not allocated well, then the value of the product will be diminished.
A. resources are being allocated efficiently to the production of shoes
If you think about the distribution of resources, you would realize that there is a need to use the best resources first to maximize production. This is called Allocative Efficiency. A business or a government would use this technique when it wants to distribute goods or services in response to consumer demand. The aim is to distribute the goods or services in such a way that their marginal cost and the consumer’s marginal utility are equal. Once this condition has been reached, the company or government is considered to be allocative.
During this period, the ministry faced the daunting task of gathering information about the available resources and distributing them in a systematic way. They had little hope of improving the supply of women’s shoes.
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