Th3.4: ^^ Productive Efficiency Flashcards
1
Q
When does a firm have productive efficiency?
A
when its products are produced at the lowest average cost so the fewest resources are used to produce each product
2
Q
The minimum resources are used to…
A
produce the maximum output
3
Q
When can this only exist?
A
if the firms produce at the bottom of the AC curve - in the short run this is when MC = AC
4
Q
However, productive efficiency is only possible if…
A
if there is no technical efficiency, where a given output is produced with minimum inputs - but not all technically efficient firms are productively efficient
