Market Efficiencies Flashcards
What are the 4 different types of efficiencies ?
Allocative efficiency
Productive efficiency
X efficiency
Dynamic efficiency
What is the definition of allocative efficiency ?
Allocative efficiency is where all goods and services are optimally distributed throughout the market. It is reached when no one can be made better of without making someone else worse
What is productive efficiency ?
When it is impossible for a firm to produce more of one good without sacrificing the production of another good
What is X efficiency ?
A company getting maximum benefits from its employers and product whilst minimising waste
What is dynamic efficiency ?
re investment of long run supernormal profits however the business needs to be making long run supernormal profits
Where is allocative efficiency found on the graph ?
Where MC = AR
Where is productive efficiency found on a graph ?
Where MC = AC
Where is X efficiency found on a graph ?
On the AC curve
What is the consumer analysis for allocative efficiency ?
Resources follow consumer demand
Low prices
Maximisation of consumer surplus
High choice
High quality
What is the consumer analysis for productive efficiency?
Lower prices
High consumer surplus
Full exploitation of economies of scale
What is the consumer analysis for X efficiency ?
Low prices
High consumer surplus
What is the consumer analysis for dynamic efficiency ?
New innovation products
Lower prices over time
High consumer surplus
What is the producer analysis for allocative efficiency ?
Retain or increase market share
Stay ahead of rivals
Increase profits
What is the producer analysis for productive efficiency ?
More production at lower AC
Higher profits
Lower prices and greater market share
What is the producer analysis for dynamic efficiency ?
Long run profit max
Lower costs over time
Retain / increase market share
Stay ahead of rivals
