Hedrick Smith was a foreign correspondent for the New York Times who lived in
the Soviet Union in the \(1970 \mathrm{~s}\), a period when the country had a
planned economy rather than a market system. In a book he wrote about everyday
life in the Soviet Union, Smith made the following observations about shopping
in Moscow:
At first it seemed \(\ldots\) that the stores were pretty well stocked. Only as
we began to shop in earnest \(\ldots\) did the Russian consumer's predicament
really come through to me. First, we needed textbooks for our children
\(\ldots\) and found that the sixth-grade textbooks had run out.... We tried to
find ballet shoes for our 11 -year-old daughter... only to discover that in
this land of ballerinas, ballet shoes size 8 were unavailable in Moscow.... I
tried to find shoes for myself. They were out of anything in my size but
sandals or flimsy, lightweight shoes that the clerk, with one look at me,
recommended against buying. "They won't last," he admitted.
a. Judging by Smith's observations, briefly explain whether the Soviet Union
achieved allocative efficiency in the production of sixth-grade textbooks,
ballet shoes, and men's shoes.
b. Can we tell from these observations whether the Soviet Union achieved
productive efficiency in the production of sixth-grade textbooks, ballet
shoes, and men's shoes? Briefly explain.
