Efficiency

Question 1

What is efficiency

Answer 1

Making optimal use of scarce resources to help satisfy our changing wants and needs

Question 2

When is allocative efficiency reached

Answer 2

When no one can be made better off without making someone else worse off (=Pareto efficiency)

Question 3

Main condition required for allocative efficiency

Answer 3

Market price = marginal cost of supply

Question 4

When is a firm productively efficient

Answer 4

When it is operating at the lowest point on its average cost curve

Question 5

When does productive efficiency relate to

Answer 5

When an economy is on their PPF

Question 6

What is social efficiency

Answer 6

MSB = MSC

Question 7

When does dynamic efficiency occur

Answer 7

When businesses supplying a market successfully meet out changing needs and wants over time

Question 8

How do takeovers boost economic inefficiency

Answer 8

Economies of scale (from horizontal integration)- productive efficiency
Dynamic efficiency (money to innovate)
Competition (allocatively effect prices)

Question 9

How takeovers don’t boost economic efficiency

Answer 9

Increased market power = X efficiency

Diseconomies of scale risk