3.3.5 Efficiency

Question 1

What is Allocative efficiency?

Answer 1

When the value consumers place on a good equals the cost of producing it. when Price = Marginal Cost

Question 2

What is Productive Efficiency?

Answer 2

When output is produced at minimum AC.

Question 3

What is dynamic efficiency?

Answer 3

The amount of customer choice available in markets together with the quality of good and services available

Question 4

What is X-inefficiency?

Answer 4

When businesses use more inputs than necessary for a given level of output.

Question 5

What causes X inefficiency?

Answer 5

Lack of competition.