Question

What do we mean by an allocation that is dynamically efficient? explain in 5- 7 sentences.

Answer 1

Complex efficiency is concerned over a period of time with a company's efficient output. Through implementing new production processes, an organization that is dynamically efficient should reduce its cost curves. Complex performance would allow both SRAC and LRAC to be reduced. Therefore, dynamic efficiency is concerned with the optimum rate of innovation and investment to improve production processes which help to reduce the average cost curves in the long run.

Implementing better working practices and better management of human capital may also require complex performance. Better relationships with unions, for example, which help introduce new work practices. A trade-off requires complex effectiveness. In the short term, investing in better technology can entail higher costs. But the company may not be able to improve over time without this commitment and creativity.

Investment–investment in new technology and improved capital in the future state of technology can allow lower costs. Rapid technology development will allow firms to produce more for lower costs.
Workers' and managers ' motivation–do managers have risk-taking and growth opportunities or is the company's system set up to promote sluggish production access to finance. A business that does not have access to funding will fail to invest in new assets that will allow lower costs.