<p>Has anybody come across a nice, intuitive (i.e. neither formal nor technical) way to demonstrate how markets yield both productive and allocative efficiency?</p>

<p>I suppose the allocative argument requires just a very superficial treatment of the first fundamental theorem, which is doable. But what about productive efficiency?</p>

<p>I'm teaching Econ 101 and I don't like the textbook's treatment of the topic -- it basically asserts efficiency without even trying to argue it.</p>

CC BY-SA 3.0
2016-06-15T05:25:18.230Z
What tools do you use in your class? Do you use indifference curves and Marginal Rate of Substitution? Would you consider a geometric treatment intuitive?
Giskard
CC BY-SA 3.0
2016-06-15T06:01:36.867Z
@denesp Yes, I use both of those. I even acknowledge the existence of derivatives (god forbid!), but I don't ask them to differentiate. But yes, most of how I'm teaching the class is geometric, so that would fit the bill perfectly.
Shane
<markets><competitive-equilibrium><efficient-markets>
Demonstrating that markets yield productive and allocative efficiency to introductory students
Shane
# Demonstrating that markets yield productive and allocative efficiency to introductory students

(Asked by: username_0 on 2016-06-15)

Has anybody come across a nice, intuitive (i.e. neither formal nor technical) way to demonstrate how markets yield both productive and allocative efficiency?

I suppose the allocative argument requires just a very superficial treatment of the first fundamental theorem, which is doable. But what about productive efficiency?

I'm teaching Econ 101 and I don't like the textbook's treatment of the topic -- it basically asserts efficiency without even trying to argue it.

**Tags:** markets, competitive-equilibrium, efficient-markets
> **Comments:**
> **username_1**: What tools do you use in your class? Do you use indifference curves and Marginal Rate of Substitution? Would you consider a geometric treatment intuitive?  
> **username_0**: @denesp Yes, I use both of those. I even acknowledge the existence of derivatives (god forbid!), but I don't ask them to differentiate. But yes, most of how I'm teaching the class is geometric, so that would fit the bill perfectly.  

---

## 0 answers

