Efficiencies

Question 1

Allocative efficiency def + which market structures are

Answer 1

Price = Marginal Cost - Allocating goods to meet customer needs/ wants
Perfect competition IS
Monopolies are NOT

Question 2

Dynamic efficiency def + which market structure is

Answer 2

Using new technology and innovation to increase productivity
Monopoly IS
Oligopoly IS (a bit) - no guarantee they will have the abnormal profits to reinvest and improve with

Question 3

Productive efficiency def + which market structures is

Answer 3

Produce at the bottom of the AC curve (to charge low prices)
Competition IS
Monopolistic competition IS
Monopolies are NOT

Question 4

X Inefficient

Answer 4

No incentive to cut costs so costs are higher than should be
Monopoly IS
Costs may be high due to ignorance (can just pay it)
Or the principle agent problem (owners spending more than should be bc manager isn’t there)