3.4.1 Flashcards
1
Q
What’s allocative efficiency?
A
This is when the utility of consumers are maximised.
2
Q
What’s productive efficiency?
A
This is when products are produced at a level of output where average cost is the lowest.
3
Q
What’s dynamic efficiency?
A
Firms improving efficiency in the long-run by developing new products and new production techniques.
4
Q
What’s X-inefficiency?
A
Inefficiency caused by unnecessary costs and wastage.
5
Q
Under only what market structure can productive and allocative be achieved?
A
Perfect competition.
6
Q
What’s the condition for productive efficiency?
A
MC = AC
7
Q
What’s the condition for allocativ3 efficiency?
A
P = MC
