Th3.4: ^^ Dynamic Efficiency Flashcards
1
Q
When is dynamic efficiency achieved?
A
when resources are allocated efficiently over time
2
Q
What is dynamic efficiency concerned with?
A
investment, which brings new products and new production techniques
3
Q
What is the alternative?
A
static efficiency - efficiency at a set point in time
4
Q
What are some examples of static efficiency?
A
allocative and productive efficiency
5
Q
In what markets will dynamic efficiency be achieved?
A
in markets where competition encourages innovation but where there are differences in products and copyright/patent laws
6
Q
Why is supernormal profit required?
A
to provide firms with the incentive to invest and the ability to do so
