Efficiency - A2 Economics OCR

All the types of efficiency that are relevant to the A2 Transport exam. 

P - price 

MC - marginal cost 

MR - marginal revenue 

AC - average cost 

AR - average revenue 

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  • Created by: Jade
  • Created on: 01-12-12 11:37
What is productive efficiency?
Productive efficiency is where firms are maximising output from given inputs.
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Where does productive efficiency occur?
AC=MC
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What is allocative efficiency?
Allocative efficiency is when scarce resources are used in a way that maximises consumer satisfaction.
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Where does allocative efficiency occur?
P=MC
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What is true of allocative efficiency?
The price paid by the consumer represents the true cost of producing the last unit
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Allocative efficiency does not apply to which market structure?
Monopolies
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What is economic efficiency?
Economic efficiency occurs in a market when both allocative and productive efficiency are achieved.
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What is X inefficiency?
X inefficiency occurs when a firm uses more inputs than are necessary for a given level of output. Associated with lack of competition e.g. within a monopoly
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What is static efficiency?
Static efficiency occurs in a single time period e.g. efficiency now
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What is dynamic efficiency?
Dynamic efficiency is improvements in products, processes and productivity over time by exploiting economies of scale or successful investment in research and development. In short, efficiency over time.
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What is research and development?
Research and development is the creative work undertaken to apply scientific and technological innovations to products and processes.
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Improving products helps a firm gain or at least retain ______ in the face of competition
Market share
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Other cards in this set

Card 2

Front

Where does productive efficiency occur?

Back

AC=MC

Card 3

Front

What is allocative efficiency?

Back

Preview of the front of card 3

Card 4

Front

Where does allocative efficiency occur?

Back

Preview of the front of card 4

Card 5

Front

What is true of allocative efficiency?

Back

Preview of the front of card 5
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Comments

davidsalter

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A set of 10 questions on efficiency. Take a break from reading by testing yourself. Could show areas for further study.

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