Efficiency

Question 1

Technical efficiency

Answer 1

When a firm produces the maximum output from the minimum quantity of inputs such as labour capital and technology

Question 2

Productive efficiency

Answer 2

This occurs when the maximum number of goods and services are produced with a given amount of inputs
MC=AC

Question 3

X inefficiency

Answer 3

Occurs when firms don’t have incentives to cut costs so costs end up higher than they should be

Question 4

Allocative efficiency

Answer 4

Efficiency with which markets are allocating resources at the correct quantity at the correct price
Price=mc

Question 5

Static efficiency

Answer 5

A firms efficiency at a particular point in time

Question 6

Dynamic efficiency

Answer 6

Measures which forms of efficiency improves overtime

Question 7

Collusion

Answer 7

When two or more firms agree to manipulate the marker for their self interest

Question 8

Formal collusion

Answer 8

Involves groups of rival companies that agree to collude in setting prices rather than compete

Question 9

Tacit collusion

Answer 9

Collusion between competitors, which do not explicitly exchange information and achieving an agreement about coordination and conduct

Question 10

Price collusion

Answer 10

Illegal price fixing

Question 11

Leadership collusion

Answer 11

Happens when several dominant companies agree to maintain their prices in parallel alignments