3.4 - market structures Flashcards
(4 cards)
1
Q
What is productive efficiency?
A
When AC is at its lowest point. (MC=AC)
2
Q
What is allocative efficiency?
A
When welfare is maximised. (MC=AR or price or demand)
3
Q
What is X-inefficiency?
A
When at a given level of output, a firm’s costs are above their average cost curve.
4
Q
What is dynamic efficiency?
A
How changing technology improves a firm’s output potential over time. A firm can only be dynamically efficient if it is making supernormal profit.
