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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.

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  • $\begingroup$ 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? $\endgroup$ – Giskard Jun 15 '16 at 5:25
  • $\begingroup$ @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. $\endgroup$ – Shane Jun 15 '16 at 6:01

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