efficiency (L7)

Question 1

productive efficiency

Answer 1

lowest point of AC curve to minimise costs in short run and exploits economies of scale

Question 2

allocative efficiency

Answer 2

resources follow consumer demand

where demand=supply/MSB=MSC/P=MC

Question 3

x inefficiency

Answer 3

not producing at the lowest possible point on LRAC

Question 4

dynamic efficiency

Answer 4

looks at how tech changes over time too, looking at long run supernormal profit

Question 5

static

Answer 5

efficiencies are at one point in time

Question 6

allocative consumer + producer analysis

Answer 6

benefits consumers as increase choice n quality

producers benefit from increased market share, being ahead of rivals

Question 7

productive consumer +producer analysis

Answer 7

increases consumer surplus with lower prices

more production n profit at lower ac

Question 8

dynamic consumer +producer analysis

Answer 8

reinvesting into R&D consumers benefit from new innovation n prices fall over time
producers stay ahead of rivals

Question 9

x consumer + producer analysis

Answer 9

consumers get lower prices

producers have more profit