Efficiency 3.4.1

Question 1

What are the 4 types of efficiency

Answer 1

Productive
Allocative
X
Dynamic

Question 2

What is Productive efficiency and where does it occur

Answer 2

Costs minimised due to full exploitation of economies of scale
When MC = lowest AC

Question 3

What is Allocative efficiency and where does it occur

Answer 3

Resources follow consumer demand where welfare is maxmised
MC = AR MSB=MSC

Question 4

What is X-inefficiency and where does it occur

Answer 4

Firm lacks the incentive to control production costs due to a lack of competition

ATC is higher than should be

Question 5

What is Dynamic efficiency and where does it occur

Answer 5

How changing tech improves a firms output potential over time
SNP is present AR > AC