when all of the data for a market is accessible companies can make accurate decisions about what projects might be most profitable and manufacturers can concentrate on producing products most desired by the general population 
in economics allocative efficiency materializes at the intersection of the supply and demand curves at this equilibrium point allocative efficiency exists for a firm producing the output for which the price is equal to the marginal cost of production allocative efficiency measures how an economy uses resources to produce the goods and services people value the most requirements for allocational efficiencyan efficient market is one in which all pertinent data regarding the market and its activities is readily available to all market participants and is always reflected in market prices for the market to be efficient it must be both informationally efficient and transactionally or operationally efficient when a market is informationally efficient all necessary and pertinent information about the market is readily available to all parties involved in other words no parties have an informational advantage over any other image by sabrina jiang investopedia 2021meanwhile all transaction costs are reasonable and fair when a market is transactionally efficient this ensures that all transactions are equally executable by all parties and not prohibitively expensive to anyone if these conditions of fairness are met and the market is efficient capital flows will go to where they will be the most effective and provide an optimal risk reward scenario for investors 