efficiencies

Question 1

what is productive efficiency and where does it sit on a revenue diagram ?

Answer 1

productive efficiency is where a firm maximises output by minimising costs. this is the lowest point on an average costs diagram. the Marginal cost passes through the minimum point on the average cost curve

Question 2

what is allocative efficiency ?

Answer 2

the optimum output of goods and/ or services taking into account consumer preferences. this is where AR =MC which is also refered to as sales maximisation where firms are making normal profits

Question 3

what is dynamic efficiency

Answer 3

dynamic efficency occurs when firms make supernormal profits over a period of time which allows them to reinvest these supernomal profits back into the company

Question 4

what is X efficeny

Answer 4

X efficiency occurs at any point on the AC curve. this is because they are not being wasteful