objective formulas, efficacy Flashcards
MC=MR
profit max
dynamic effieciny as long as it is going into research and development
MC=AR
allocative efficiency
MC=ATC
productively efficient
MR=0
revenue max
ATC=AR
sales max
allocatively efficient
MC=AR
consumers wants and needs are met
productively efficient
lower average cost/ mes MC=ATC
revenue max
to gain market share MR=0
still likely to make supernormal profit
sales max
wages increase
normal profit
limit competition
ATC=AR
food indrusty it is likely to expire
new seasons
lose of tread
x - inefficacy - monopolies - oligerlies - lack of competition - high barriers
evaluation
not pe MC=AC not at the lowest AC mes cost CP not ganing from full economic of scale not gaining from full economic of scaler
identify which
KAA revenue
revenue max - mr=0 increase market share, lower price/increase, lowered your average cost
economics of scale
become more productively efficient and therefore more allocatively efficient
evaluation revenue
not fully productively
supernormal profit have reduced so less research and development
long run quality aint improving therefore consumer surplus and allocatively efficacy will decrease as well
KAA sales max
AC=AR
normal profit
reduce waste
reduce incentive to enter the market
reduced storage cost
revenue perhaps lost
normal profit in perfect competition long run what efficecnies
allocatively
productively
abnormal profit in perfect competition short run efficiency
allocatively effect
dynamic efficient
small threat of competition as they are xineficent but not too much as there is only a small difference between where they are producing and their mes
A firm changes its goal from profit max to sales max how does it change profit and quantity
price falls - selling price, cost price stays the same
quantity increases
allocatively effiecny improves consumer surplus
A firm changes its goal from sales maximising to revenue maximising how does price and quantity change
price increases
quantity decreases
allocatively efficient falls consumer surplus falls
statc efficiency
you are being both productively and alloactibely inefficient
economic efficiency
allocatively effeicnet
productively efficient
reduce x inefienct
still try to achieve dynamic effiecnty
