Efficiency Flashcards
1
Q
what is efficiency?
A
the optimal use of societies scarce resources
2
Q
is perfect comp inefficient or efficient?
A
efficient
3
Q
what types of efficient is perfect comp?
A
productive efficiency and allocative efficiency
4
Q
productive efficiency?
A
they are produced at the lowest cost
5
Q
allocative efficiency?
A
production depends on the wants of society
6
Q
what is the production efficiency location?
A
Price = minimum of ATC
7
Q
what is the allocative efficiency location?
A
price=MC
8
Q
what is underallocation?
A
too little is produced compared to what society wants
9
Q
what is overallocation?
A
too much produced compared to what society wants
10
Q
what do the graphs of a pure competition look like?
A
market- long run equilibrium
firm- long run equilibrium
