T3 EFFICIENCY Flashcards
1
Q
What are the 4 types of efficiency
A
X efficiency, Dynamic efficiency, Allocative efficiency and productive efficiency.
2
Q
What is productive efficiency
A
Where Average cost is lowest
MC = AC
3
Q
What is meant by allocative efficiency
A
Where welfare is maximised.
Where MC = Price and where MC = AR
4
Q
What is meant by x ineffeciency
A
X-inefficiency is when a firm is producing above its average cost curve for a given level of output.
5
Q
What is meant by dynamic efficiency
A
How changing technology improves a firms output potential over time.
6
Q
Firms can only be dynamically efficient if they are making
A
supernormal profit
7
Q
A
