3.5.11 - Market Structure, Static Efficiency, Dynamic Efficiency and Resource Allocation

Question 1

What is static efficiency?

Answer 1

Efficiency at a particular point in time.

Question 2

What types of efficiency can be considered static?

Answer 2

Allocative and productive.

Question 3

What types of firms benefit from dynamic efficiency?

Answer 3

Monopolies and imperfectly competitive firms.

Question 4

How can monopolies improve their dynamic efficiency?

Answer 4

Due to making abnormal profit in both short-run and long-run, this profit can be reinvested to achieve improvements in dynamic efficiency via R&D and innovation.

Question 5

What is dynamic efficiency?

Answer 5

The improvements in productive efficiency over time.

Question 6

What types of efficiency does monopolistic competition exhibit in the long-run?

Answer 6

Allocative efficiency.

Question 7

What types of efficiency do perfectly competitive firms exhibit in long-run equilibrium?

Answer 7

Allocative efficiency
Productive efficiency

Question 8

What types of efficiency do monopolies and oligopolies typically exhibit?

Answer 8

Dynamic efficiency