Th3.4: Efficiency 3 Flashcards
1
Q
Why will these firms be statically inefficient?
A
since they are not productively or allocative efficient
2
Q
What efficiency are they likely to be?
A
dynamically efficient - make supernormal profits so have the funds to invest and they have an incentive to invest due to competition, although some may just share its profits with its shareholders
3
Q
What will they be able to do?
A
exploit economies of scale, lowering costs
