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Economics Unit 3 > Types of effciency > Flashcards

Types of effciency Flashcards

1
Q

Define Allocative efficiency?

A

Resources in the market are allocated by the price mechanism.

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2
Q

What is the formula for Allocative efficiency?

A

P=MC

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3
Q

what would the graph look like for Allocative efficiency?

A
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4
Q

What is productive effciency?

A

When a firm is producing at its lowest average cost?

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5
Q

What does point A on this diagram show?

A

Productive effciency

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6
Q

Define technical efficency

A

Achiving a given level of out put with minimum imputs

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7
Q

What does point B represent on this diagram?

A

x-inefficiency when a firm is not technicaly efficent, any point inside the AC curve.

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8
Q

What is dynamic Effiiciency?

A

The firm is constantly changing it effcieny to achive technical and productive effciency.

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9
Q

Defin Paretro Efficiency?

A

Point were it is unable to make one person better without making another person worse off

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Economics Unit 3 (12 decks)

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