Efficiency Flashcards
1
Q
what is productive efficiency?
A
it is when average costs are at its lowest
MC=AC
2
Q
What is allocative efficiency?
A
It is when welfare is maximised . MC=AR
3
Q
What is X - inefficiency?
A
X inefficiency is when a firm is producing above its average cost curve for a given level of output
4
Q
what is dynamic efficiency?
A
how change in technology improves a firms output potential over time - this means the firm must have supernormal profit
5
Q
A
