Competitive markets and perfect competition

Question 1

Allocative efficiency

Answer 1

the optimum allocation of scarce resources that best accords with the consumers’ pattern of demand.

Question 2

Price taker

Answer 2

a firm that has to accept the price ruling in the market.

Question 3

Homogeneous

Answer 3

all products are the same irrespective of who makes them.

Question 4

Optimum output

Answer 4

the (optimum) combination of fixed and variable factors that minimises ATC.

Question 5

Static efficiency

Answer 5

efficiency at a point in time- includes allocative and productive efficiency.

Question 6

Dynamic efficiency

Answer 6

efficiency over time-new products, techniques and processes which increases economic growth.

Question 7

Structural performance and conduct model

Answer 7

individual performance depends ultimately on the industry structure where the variables in the model are structure, conduct and performance.