Efficiency Flashcards
1
Q
What’s allocative efficiency?
A
Where the resources used in the production of a good are equal to the perceived value of the good placed by the consumer.
2
Q
What’s the formula for allocative efficiency?
A
P = MC
3
Q
What’s productive efficiency?
A
The lowest point on the AC curve
4
Q
What’s x-efficiency?
A
Being both productively and allocatively efficient
5
Q
What’s static efficiency?
A
At a given point in time.
AR = MR = AC
6
Q
What’s dynamic efficiency?
A
Efficiency over time. Use supernormal profits to reinvest in innovation, research and development, and economies of scale.
