Theme 3:4.1:Efficiency

Question 1

productive efficiency

Answer 1

on the lowest point of the AC curve
producing at the lowest cost possible

Question 2

Allocative efficiency

Answer 2

MC=AR also D=S
when resources are allocated specifically towards consumer demand

Question 3

X efficiency

Answer 3

Anywhere on the AC curve
minimisation of was (no excess costs)

Question 4

where is X inefficiency

Answer 4

within the AC curve

Question 5

Dynamic efficiency

Answer 5

where there is SNP
re-investing LR SNP e.g. into R&D

Question 6

static vs dynamic efficiency

Answer 6

static happens at one specific point whereas dynamic happens over time

Question 7

impact of AE on consumers and producers

Answer 7

consumers:
get exactly what they demand
high quality

producers:
keep or increase market share
increase profit

benefits both consumers and producers

Question 8

impact of PE on consumers and producers

Answer 8

consumers:
low prices
increased consumer surplus

producers :
produce at low cost and higher profit

Question 9

impact of XE on consumers and producers

Answer 9

consumers:
low prices

producers:lowers cost so higher profit

Question 10

impact of DE on consumers and producers

Answer 10

consumers:
better quality innovative products
low prices

producers:
lowers cost over time
increase market share