Efficiency Flashcards
1
Q
What is economic efficiency?
A
Efficiency is about a society making optimal us of scarce resources to help satisfy changing wants and needs.
2
Q
What is allocative efficiency?
A
This occurs when the value that consumers place on a good or service equals the cost of the factor resources used up in production.
3
Q
What is productive efficiency?
A
A firm is productively efficient when its operating at he lowest point on its average cost curve.
4
Q
What is social efficiency?
A
The socially efficient level of output and/or consumption occurs when marginal social benefit = marginal social cost.
5
Q
What is dynamic efficiency?
A
This occurs when businesses supplying a market successfully meets our changing needs and wants over time.
Also known as innovation.
