Allocative inefficiency
What Allocative inefficiency means in Economics A-Level, as defined for AQA.
Definitions of Allocative inefficiency
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Reference: AQA
A disadvantage of monopoly where output is restricted and prices are set above marginal cost, causing a deadweight loss of consumer surplus.
A disadvantage that price discrimination can lead to.
Topics that use Allocative inefficiency
- Monopoly and monopoly power (AQA A-Level)
- Price discrimination (AQA A-Level)
Related terms
- Monopoly power
- Arbitrage
- Consumer surplus
- Economies of scale
- Elasticity of demand
- Equity
- Market concentration
- Price determination
Using Allocative inefficiency in the exam
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