Types of efficiencies Flashcards
1
Q
Allocative efficiency
A
Allocating rescources in the best possible way to maximise welfare
MC=AR
1
Q
Productively efficient
A
Producing at the lowest possible cost, no waste
MC=AC
2
Q
X efficiency
A
Producing at the lowest possible cost at any specific output.
Anywhere AC curve
3
Q
Dynamic efficiency
A
Re-investing super normal profit to improve products or the production process.
eval point: SOME FIRMS DO THIS, NOT ALL
4
Q
Market structures determinant
A
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
5
Q
Total cost equation
A
Fixed cost + variable cost
6
Q
Average cost equation
A
Total cost/output
7
Q
Fixed cost meaning
A
costs that don’t change with output
8
Q
variable cost meaning
A
Costs that do change with output
