Understand and distinguish between productive and allocative efficiency Know that the minimum point on the average total cost is the most productively efficient point and that allocative efficiency occurs where price is equal to marginal cost Understand the meaning of inefficiency e.g. He has over twenty years experience as Head of Economics at leading schools. The conduct of businesses in a market can have a big impact on economic efficiency and welfare outcomes 3. LS23 6AD, Tel: +44 0844 800 0085 Therefore, it might be easy for the monopolist to make supernormal profits. Allocative Efficiency Allocative efficiency is achieved when the value consumers place on a good or service (reflected in the price they are willing to pay) equals the cost of the resources used up in production. Economies of scale: Monopoly producers may achieve economies of scale – leading to lower average costs. This can be achieved through investment into production methods and innovation. A* Evaluation: Business Conduct and Efficiency A Level Microeconomics Revision 2019 Tutor2u Economics ... Market performance Efficiency (allocative, productive, dynamic) Economic welfare (affordability, equity in access) Social welfare (meeting environmental challenges) Real price levels Productivity growth Returns to equity to drive future investment … … A* Evaluation: Business Conduct and Efficiency A Level Microeconomics Revision 2019 Tutor2u Economics 2. Boston House, Remote learning solution for Lockdown 2021: Ready-to-use tutor2u Online Courses Again this is probably because in perfect competition there is not incentive for individual firms to spend on research … Learn more ›. 9. It can be argued that monopoly is dynamically efficient, whilst perfect competition is not. 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Tutor2u - Economic Efficiency 1. Dynamic efficiency is a central issue in analyses of economic growth, the effects of fiscal policies, and the pricing of capital assets. In a celebrated article, Peter Diamond (1965) shows that a competitive economy can reach a steady state in which there is unambiguously Dynamic efficiency Dynamic efficiency occurs over time and is strongly linked to the pace of innovation within a market and improvements in the range of choice for consumers and the performance / reliability / quality of products. when (P = Minimum ATC) Allocative efficiency: When the quantity of output produced achieves greatest level of total welfare possible (P = MC). Regulation: Monopoly producers may be subject to price regulation which limits their profitability Demand … In essence, it describes the productive efficiency of an economy (or firm) over time. X Efficiency would occur be when competitive pressures cause firms to combine the optimum combination of factors of production and produce on the lowest possible average cost curve. All students preparing for mock exams, other assessments and the summer exams for A-Level Economics. • Dec 2015: Porsche to make electric sports car in €700m project - aimed at challenging Tesla's dominance … Individual teaching resources for delivering specific topics, including teaching instructions. Dynamic efficiency The concept of dynamic efficiency is commonly associated with the Austrian Economist Joseph Schumpeter and means technological progressiveness and innovation. Geoff Riley 7th September 2017. National Welfare Fund (Russia): One of two parts of the Russian sovereign wealth fund, the other being the Reserve Fund. 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