Efficency

Question 1

What is efficiency (2)

Answer 1

Used to measure how good market is at allocating resources
How well resources used to prided an end result

Question 2

Types of efficiency (3)

Answer 2

Static = productive + allocative
Dynamic
X efficiency

Question 3

How to achieve dynamic (3++)

Answer 3

Occurs over time
Strongly linked to innovation
Improvements in range of choice for consumers + performance / reliability / quality of products.

Question 4

Static efficiency

Answer 4

Exists at a point in time

Question 5

Allocative what (3++)

Answer 5

Measures whether resources are allocated to g/s consumers demand = max welfare
Marginal benefits (price) = marginal costs
MC = AR
Fixes economic problem

Question 6

Productive efficiency (4++)

Answer 6

Production is achieved at lowest cost
PPF or MES
MC=AC
Only if technical efficiency = given output quantity produced with minimum inputs

Question 7

What is X efficiency (3)

Answer 7

Organisational slack
Firm is not RPI ducking at lowest costs for given level of output
Operates within AC curve not on boundary

Question 8

Why - x efficiency (2)

Answer 8

Management is poor at controlling costs = employs to many
Stakeholders rise prices = trade unions get higher wage or environmental groups force to chnage production