U1 Revision 2 Flashcards
(14 cards)
What is productive efficiency?
Productive efficiency occurs when a firm produces goods at the lowest possible cost.
True or False: Productive efficiency means that a firm is maximising its output given its input resources.
True
Fill in the blank: A firm is productively efficient when it operates on the _____ curve.
production possibilities
Which of the following is NOT a characteristic of productive efficiency? A) Minimum average cost B) Maximum output C) Allocation of resources to least cost production
B) Maximum output
What is the relationship between productive efficiency and economies of scale?
As firms increase production, they may achieve economies of scale, leading to lower average costs and increased productive efficiency.
What is meant by a shift in demand?
A shift in demand refers to a change in the quantity demanded at every price level, caused by factors other than the price of the good itself.
True or False: An increase in consumer income typically causes a rightward shift in the demand curve for normal goods.
True
Fill in the blank: A decrease in the price of a substitute good will cause the demand curve for a product to shift to the ______.
left
What are the main factors that can cause a shift in the supply curve?
Factors include production costs, technology changes, number of sellers, and government regulations.
Which of the following would likely cause a leftward shift in the supply curve: A) Decrease in production costs B) Increase in taxes C) Technological advancements D) Increase in the number of suppliers?
B) Increase in taxes
What is a monopoly?
A market structure where a single seller controls the entire supply of a product or service.
True or False: In monopolistic competition, firms sell identical products.
False
Which market structure allows for the most competition?
Perfect competition
Name one key characteristic of monopolistic competition.
Product differentiation
