A firm operating in a market economy has a strong incentive to be productively efficient and allocatively efficient because the former enables it to minimize production costswhile the latter ensures it of ample revenues. If a firm is productively and allocativelyefficient, it earns a profit; if it is not, it suffers a loss. Would you expect the new and better machinery and equipment to be adopted more rapidly in amarket economy or in a centrally planned economy?
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