Efficiencies Flashcards
(6 cards)
1
Q
Economic Efficiency
A
A society making optimal use of our scarce resources to help satisfy changing needs and wants
2
Q
What are the different types of efficiency?
A
- Allocative efficiency
- Productive Efficiency
- Dynamic Efficiency
- X- efficiency
3
Q
Allocatively Efficiency
A
When the PL that consumers are willing to pay matches the cost of producing it.
- Where P = MC (On diagram where MC intersects AR)
4
Q
Productive Efficiency
A
When a firm is producing at the lowest possible average cost, using the fewest resources.
5
Q
Dynamic Efficiency
A
When firms adapt to changing needs and wants of consumers over time.
6
Q
X-inefficiency
A
When a firm operates with higher costs than necessary to produce a given output.
(not producing in the cheapest way possible)
