Efficiency analysis

Question 1

consumer analysis of allocative efficiency

Answer 1

• Resources follow consumer demand
• Low prices
• Maximisation of CS
• High choice
• High Quality

Question 2

producer analysis of allocative efficiency

Answer 2

• Retain or increase market share
• Stay ahead of rivals
• Increase profit

Question 3

consumer analysis of productive efficiency

Answer 3

• Lower prices
• High consumer surplus
• Full exploitation of EoS

Question 4

producer analysis of productive efficiency

Answer 4

• More production at lower AC
• Higher profit
• Lower prices and greater market share

Question 5

consumer analysis of dynamic efficiency

Answer 5

• New innovative products
• Lower prices over time
• High consumer surplus

Question 6

producer analysis of dynamic efficiency

Answer 6

• LR profit max.
• Lower costs over time
• Retain/ increase market share
• Stay ahead of rivals

Question 7

consumer analysis of x efficiency

Answer 7

• Low prices

- Higher consumer surplus

Question 8

producer analysis of x efficiency

Answer 8

• Lower costs
• Higher profits
• Lower prices + higher market share