3.4.1 - Effeciency

Question 1

Blurt everything you know about X-inefficiency

Answer 1

• For a given level of output
• Cost are above AC

Question 2

Blurt everything you know about Dynamic efficiency

Answer 2

• They need to be making supernormal profits to invest in R&D

Question 3

Blurt everything you know about Productive efficiency

Answer 3

• When average total costs(AC) is at its lowest
• MC=AC

Question 4

Blurt everything you know about Allocative efficiency

Answer 4

• Where welfare is maximised
• MC=Price (AR - AR is also = Demand)
• Any other point would be considered allocatively inefficient : mention this in an exam

Question 5

Answer 5

Question 6

Answer 6

Question 7

Efficiency and business objectives link on diagram