Efficiency Flashcards
0
Q
Allocative Efficiency
A
When firms are producing at a level where price is equal to marginal cost.
1
Q
Productive Efficiency
A
When firms are producing at the lowest point on their average cost curve.
2
Q
X- inefficiency
A
When a firm fails to minimise its costs at a given level of output.
3
Q
Minimum Efficient Scale of Profuction
A
The lowest level of output at which long run average cost us lowest.
