3.4.1 efficiency Flashcards
1
Q
what is efficiency?
A
it is about how well firms allocate scarce resources
2
Q
what is x inefficiency?
A
when the market faces a lack of competition a firm may experience ‘organisational slack’
3
Q
what is development
A
due to a lack of competition resources may not be used as efficiently as possible
4
Q
what is productive efficiency
A
MC=AC
producing at the lowest possible cost
5
Q
what is allocative efficiency?
A
MC=AR (price)
this occurs when there is optimal distribution of good and services, taking into account consumer’s preferences.
6
Q
what is dynamic efficiency?
A
this is concerned with the optimal rate of innovation and investment to improve production costs which help to reduce the LRAC curve.
- firms ay use their SNP to invest + become dynamic efficient in the LR.
7
Q
A
