Economic Efficiency

Question 0

If firms aren’t…

Answer 0

Efficient they will not have the ability to compete within a market

Question 1

Economic efficiency definition

Answer 1

Is concerned with how well resources are used to resolve the three fundamental economic questions what, how and for whom production should take place

Question 2

Production efficiency

Answer 2

Is when the costs of production is at its lowest this occurs in the long run- monopolistic comp

Question 3

Firms with…

Answer 3

high unit labour costs may not be able to justify remaining within the market as the market price is driven down by the forces of competition

Question 4

Allocative efficiency definition

Answer 4

When resources have been allocated in such a way that no consumers would be better off without making others worst off
This occurs in both the long run and short run
Price= marginal cost

Question 5

X efficiency definition…

Answer 5

Occurs when firms have incentives to cut costs and so use the optimal combination of the factors of production

Question 6

X efficiency means that..

Answer 6

Actual costs are as low as possible

Actual costs are higher than potential