efficiency Flashcards
1
Q
What is meant by: Productive efficiency?
A
When a firm is producing at its lowest average cost, where MC = AC.
2
Q
What is meant by: Allocative efficiency?
A
When welfare is maximised, where MC = AR.
3
Q
What is meant by: X-inefficiency?
A
When a firm is producing above its average cost curve for a given level of output.
4
Q
What is meant by: Dynamic efficiency?
A
Dynamic efficiency is how changing technology improves a firm’s output potential over time.
5
Q
why may maximum wages not work
A
cpuld be paid in salaries or shares
