Efficiency

Question 1

What is productive efficiency

Answer 1

When a firm produces at an output where average costs are minimised
AC=MC

Question 2

What is allocative efficiency

Answer 2

Output where consumer welfare is maximised
AR=MC

Question 3

What is dynamic efficiency

Answer 3

When investment in research and development leads to resources being allocated efficiently over time

Question 4

What is X-efficiency

Answer 4

Producing at the lowest possible average costs for a given level of output