Micro 8

Question 1

How should i remember how a consumer and producer surplus graph is structured ?

Answer 1

COPs - consumer over producer

Question 2

What is a consumer surplus ?

Answer 2

is the difference between the price consumers are willing to pay and the price they actually pay.

Question 3

What is the producer surplus ?

Answer 3

is the difference between the price producers are willing to sell at and the price they actually receive

Question 4

What is allocative efficiency ?

Answer 4

Where P=MC This is essentially when the price benefits the consumer = it is usually deemed where the market clearing price falls .

Question 5

What is productive efficiency ?

Answer 5

ATC = MC Occurs when the minimum inputs produce maximum output at lowest cost.

Question 6

What is static efficiency ?

Answer 6

occurs when resources are being used in the most efficient manner at a point in time.

Question 7

What is dynamic efficiency ?

Answer 7

occurs when firms improve technology and production methods over a period of time.

Question 8

What are the factors affecting dynamic efficiency ?

Answer 8

Investment State of technology
Motivation of staff and managers Access to finance