Efficiency Types

Question 1

Productivity/Efficiency

Answer 1

Output per unit of input

Question 2

Allocative Efficiency

Answer 2

Will occur when the allocation of resources best satisfies society’s needs and wants, and general wellbeing.

Question 3

Productive/Technical Efficiency

Answer 3

Firms using the lowest-cost method of production and minimising the resources used (maximising output per unit of input). Illustrated by an point on curve (as productivity is maximised)

Question 4

Dynamic Efficiency

Answer 4

How quickly resources can be moved from one use to another in responses to changing consumer preferences. Illustrated by speed of reallocation from one point on curve to another as relative prices change.

Question 5

Intertemporal Efficiency

Answer 5

Optimal allocation of resources between current and future consumption

Question 6

Point inside Curve and Efficiency

Answer 6

Resources not being used efficiently, unemployment levels, low living standards

Question 7

Point outside curve and efficiency

Answer 7

Not achievable without increase in productive capacity

Question 8

Resource allocation

Answer 8

Refers to how land labor and capital are directed to the production of g+s to meet the needs of businesses, households, governments and other economic agencies