5.11 Market Structure, Static Efficiency, Dynamic Efficiency And Resource Allocation Flashcards
what is state efficiency?
efficiency at a particular point in tike(e.g prodictive and allocative)
what is productive efficiency?
minimsing of average costs
when does allocative efficiency occur?
when P=MC
what is dynamic efficiency?
improvements on other types of efficency that occur over time as a result from technical progress and innovation(especially productive efficiency)
what does improvments in dynamic efficiency do to the economy?
changes the allocation of resources
-resources shift from high-cost industries to lower-cost industires
there are better ways of making existing prodicts and the development of completely new products
What is dynamic efficiency
Reinvestment of supernormal profits in the business
What is x efficiency
Production with no waste
Why is allocate efficiency good for the consumer?(5)
-resources follow consumer demand
-low prices
-maximisation of consumer surplus
-high choice
-high quality
Why is allocative efficiency good for the producer?
-retain or increase market share
-stay ahead of rivals
-increase profit
Why is productive efficiency food for the consumer.
-lower prices
-high consumer surplus
-full exploration of economies of scale
Why is productively efficient good for producers?(4)
-more production at lower ac
-higher profit
-lower prices
-greater market share
How do consumers benefit from dynamic efficiency?
-new innovative products
-lower prices over time
-high consumer surplus
How do producers benefit from dynamic efficiency?
-long run profit max
-lower costs over time
-retain/increase market share
-stay ahead of rivals
Where is x efficiency shown?
Production on the Ac curve
Why is x efficiency good for consumers?
Low prices
High consumer surplus
