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July 18, 2025 

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YIELD: The rate of return on a financial asset. In some simple cases, the yield on a financial asset, like commercial paper, corporate bond, or government security, is the asset's interest rate. However, as a more general rule, the yield includes both the interest earned from an asset plus any changes in the asset's price. Suppose, for example, that a $100,000 bond has a 10 percent interest rate, such that the holder receives $10,000 interest per year. If the price of the bond increases over the course of the year from $100,000 to $105,000, then the bond's yield is greater than 10 percent. It includes the $10,000 interest plus the $5,000 bump in the price, giving a yield of 15 percent. Because bonds and similar financial assets often have fixed interest payments, their prices and subsequently yields move up and down as economic conditions change.

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ALLOCATIVE EFFICIENCY:

Obtaining the most consumer satisfaction from available resources. In other words, resources are allocated in such a way that consumer satisfaction is at its highest possible level. This is also termed either efficiency or economic efficiency.
Allocative efficiency means the economy is doing the best job possible of satisfying unlimited wants and needs with limited resources--that is, of addressing the problem of scarcity. To achieve allocative efficiency, however, the economy must first achieve technical efficiency. Technical efficiency means that society is getting the most production from available resources. In other words, there is no waste in the production process.

Allocative efficiency, however, means that this technically efficient production is also useful to or valued by people. While technical efficiency might be achieved in the production of purple spotted stuffed animals, allocative efficiency is not achieved if no one actually wants purple spotted stuffed animals and they remain stored in a big purple warehouse.

<= ALLOCATION EFFECTALTERNATIVE UNEMPLOYMENT RATES =>


Recommended Citation:

ALLOCATIVE EFFICIENCY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 18, 2025].


Check Out These Related Terms...

     | efficiency | technical efficiency | consumer sovereignty | satisfaction | production | full employment |


Or For A Little Background...

     | allocation | resource allocation | scarcity | limited resources | unlimited wants and needs | economic goals | factors of production | economic thinking |


And For Further Study...

     | distribution standards | economic system | seven economic rules | production possibilities | three questions of allocation |


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