Efficiency

Question 1

What does efficiency judge

Answer 1

How well the market allocates resources and the relationship between inputs and outputs

Question 2

What is the point for Allocative Efficiency

Answer 2

P/AR = MC

Question 3

What is Allocative Efficiency

Answer 3

When resources are used to produce goods that consumers want and value the most, maximises social welfare

Question 4

What is the point for productive efficiency

Answer 4

MC = AC

Question 5

What is productive efficiency

Answer 5

Producing at the lowest AC so the fewest resources are used to create maximum output, only possible with technical efficiency

Question 6

What is technical efficiency

Answer 6

Producing a given output with minimum inputs

Question 7

Dynamic Efficiency

Answer 7

Retained profits cause investment and innovation brings in new products and production methods which improves both efficiencies in the long run

Question 8

X - Inefficiency

Answer 8

Higher production costs than is necessary for their specific level of output, they aren’t producing on the AC

Question 9

Static Efficiency

Answer 9

When all resources and production is as efficient as it can be at that set point in time

Question 10

what does X - Inefficiency do to the AC curve

Answer 10

shift it upwards

Question 11

what does dynamic efficiency do to the AC curve

Answer 11

shift it down in the long run