efficnecy analysis

Question 1

allocative (definition, condition, consumer and producer analysis)

Answer 1

-d: where demand = supply, max of society surplus
-condition: P=MC
-consumer analysis: resources follow consumer demand, low prices, max CS, high choice and quality
-producer analysis: retain market share, stay ahead of rivals, increase profit

Question 2

productive efficiency (definition, condition, consumer and producer analysis)

Answer 2

-d: full exploitation of economies of scale: max output of lowest possible average cost
-condition: lowest point of AC
-consumer: low prices, high consumer surplus, full exploitation of EoS
-producer: mosre production at lower AC, higher profit, lower prices and greater market share

Question 3

dynamic efficnecy (definition, condition, consumer and producer analysis)

Answer 3

-d: re-investment of Supernormal profit into innovation, R and D and new tech and decrease LRAC
-condition: supernormal profit in LR
-consumer: new innovative products, lower prices over time, high consumer surplus
-producer: LR profit max, lower cost over time, retain/increase market share

Question 4

x efficiency (definition, condition, consumer and producer analysis)

Answer 4

-d: production with no waste
-condition: prod on AC curve
-consumer:low prices, high consumer surplus
-producer: lower costs, higher profit, better market share