Efficiencies

5 flashcards · Economics · by Addaneye

1. What are the four types of efficiencies?

   Allocative efficiency Productive efficiency Dynamic efficiency X - inefficiency

2. When does productive efficiency occur?

   When average cost is at its lowest MC=AC

3. When does allocative efficiency occur?

   When welfare is maximised MC=AR

4. When does X-inefficiency occur?

   When a firm is producing above its average cost curve for a given level of output

5. When does dynamic efficiency occur?

   AR > ATC How changing technology improves output potential over time