3.3.5 Efficiency Flashcards
1
Q
What is Allocative efficiency?
A
When the value consumers place on a good equals the cost of producing it. when Price = Marginal Cost
2
Q
What is Productive Efficiency?
A
When output is produced at minimum AC.
3
Q
What is dynamic efficiency?
A
The amount of customer choice available in markets together with the quality of good and services available
4
Q
What is X-inefficiency?
A
When businesses use more inputs than necessary for a given level of output.
5
Q
What causes X inefficiency?
A
Lack of competition.
