3.4 Market structures Flashcards
1
Q
What is efficiency?
A
How well the market allocates resources
2
Q
When is allocative efficiency achieved?
A
When resources are used to produce goods and services which consumers want and value most and social welfare is maximised
3
Q
If a firm overcharges for a good, are they achieving allocative efficiency?
A
No, because AR doesn’t equal MC
