Types Of Efficiency Flashcards
1
Q
What are the 4 types of efficiency
A
Productive efficiency
Allocative efficiency
X efficiency
Dynamic efficiency
2
Q
What is productive efficiency
A
When average cost is at its lowest
3
Q
Where would a productively efficient firm produce
A
Where mc = ac
4
Q
What is allocative efficiency
A
When welfare is is maximised and society is at its happiest
5
Q
When does allocative efficiency occur?
A
When MC = P (AR)
6
Q
What is x inefficiency
A
When, For a given level of output, firms costs are above the AC curve
7
Q
What is dynamic efficiency
A
Is how changing technology improves a firms output potential over time
8
Q
When is a firm dynamically efficient
A
When AR>AC
Making SNP
