Economic Efficiency Flashcards
What are the 5 types of economic efficiency?
Allocative.
Productive.
Dynamic.
Static.
X-inefficiency.
What is allocative efficiency?
The optimal allocation of resources, maximising social welfare. When no one can benefit without making someone else worse off.
When does allocative efficiency occur?
When MC meets AR.
What is economic efficiency?
Making optimal use of scarce resources to help satisfy changing wants and needs.
What is productive efficiency?
A state where a firm is producing goods or services at the lowest possible average cost, using the fewest resources.
What is dynamic efficiency?
Long term growth and development to meet changing demands in order to remain competetive in the long-run.
What is static efficiency?
The optimal allocation of resources at a specific point in time.
What is x-inefficiency?
Inefficiency NOT caused by the economy being static. e.g internal factors such as poor management.
