7.3 Efficiency and Market Failure Flashcards
1
Q
Economic efficiency
A
where scarce resources are used in the most efficient way to produce maximum output
2
Q
Productive efficiency
A
when a firm is producing at the lowest possible cost
3
Q
Allocative efficiency
A
where price is equal to marginal cost; firms are producing those goods and services most wanted by consumers
4
Q
Pareto optimality
A
where it is impossible to make someone better off without making someone else worse off
