Efficiencies

Question 1

What are the 4 types of efficiencies

Answer 1

Productive; Allocative; Dynamic; X-inefficiency

Question 2

What is productive efficiency

Answer 2

Occurs at the level of output where marginal cost = average cost (MC=AC).; It is the point at which average costs are at its lowest.

Question 3

What is allocative efficiency

Answer 3

Occurs at the level of output where average revenue = marginal cost (AR = MC).; At this point

Question 4

What is dynamic efficienncy

Answer 4

The long-term efficiency is a result of innovation as a firm reinvests its profits

Question 5

What is x-inefficiency

Answer 5

Occurs when a firm lacks the incentive to control production costs.; The ATC is higher than it should be.

Question 6

What type of efficiencies are present in firms that are in perfect competition

Answer 6

Productive efficiency; Allocative efficiency

Question 7

What type of efficiencies are present in firms that are in imperfect competition

Answer 7

It may be dynamically efficient if it reinvests supernormal profits into R and D.; It may be x-inneficient if there is a lack of competition