Please enable JavaScript.
Coggle requires JavaScript to display documents.
EFFICIENCY - Coggle Diagram
EFFICIENCY
Allocative efficiency
-
occurs when consumers are able to buy the product they desire in the quantities they desire and at the price consumers wish to pay for them
-
-
-
X efficiency
When a firm is producing at the lowest possible cost for a given level of output (on the long run average cost curve)
-
X inefficiency
when a firm is not producing at the lowest possible cost for a given level of output (above the long run average cost curve)
Dynamic efficiency
-
-
Occurs when consumer preference for present versus future consumption is met. This is when the PPF is moving outwards in accordance with those preferences
Pareto efficiency
occurs when it is not possible to change the existing allocation of resources in such a way that someone is made better off without making someone else worse off
-
-
-
Static efficiency
-
Productive and allocative efficiency are static concepts of efficiency - whether more could be produced now if resources were allocated in a different way