Micro: Efficiency etc.

Which of the following are reasons for x-inefficiency?

• Highly motivated workforce

• Inertia

• Lack of profit motive (e.g. public services)

• Lack of competition in a market

Innovation and competition between firms leads to dynamic efficiency. How might the government help to encourage dynamic efficiency in an economy?

• Grants for entrepreneurs

• Greater investment in education

• Change the visa system to allow skilled migrants to enter the country more easily

• Raise corporation tax from 19% to 25%

At what level of output is this business productively efficient?

• A

• B

• C

• D

At what level of output is there allocative efficiency in the market for electricity?

• 05

• 0E

• 0F

• F6

At which point(s) is this economy productively efficient?

• A

• B

• C

• D

At which point(s) is this economy allocatively efficient?

• A

• B

• C

• More information required

Scarce resources are used to produce the optimum range of goods and services that satisfies consumer preferences

• Allocative efficiency

• Dynamic efficiency

• X-inefficiency

• Production Possibility Frontier

When production is achieved at its lowest average cost

• Allocative efficiency

• Dynamic efficiency

• X-inefficiency

• Productive efficiency

When resources in an economy are allocated more efficiently over time

• Allocative efficiency

• Dynamic efficiency

• X-inefficiency

• Productive efficiency

When a firm is not producing at the lowest possible cost

• Allocative efficiency

• Dynamic efficiency

• X-inefficiency

• Productive efficiency