Efficiency Flashcards
1
Q
What is productive efficiency
A
When a firm produces at an output where average costs are minimised
AC=MC
2
Q
What is allocative efficiency
A
Output where consumer welfare is maximised
AR=MC
3
Q
What is dynamic efficiency
A
When investment in research and development leads to resources being allocated efficiently over time
4
Q
What is X-efficiency
A
Producing at the lowest possible average costs for a given level of output
