Decide which type of efficiency is being demonstrated: An economy that is producing without waste, so...
Decide which type of efficiency is being demonstrated:
An economy that is producing without waste, so that the choice is on the production possibility frontier.
An economy that has chosen the socially preferred point on the production possibility frontier.
When goods are being produced and sold at the lowest possible average cost on economy.
When perfectly competitive firms follow the rule that profits are maximized by producing at a quantity where price equals marginal cost.
Homework Answers
a) As the waste is zero and the production is on PPF, the firm will be economic efficient. here, to improve the output of one good, we have to reduce the output of other good.
b) It will be considered as productive efficient. As that is the most effective point where the firm can produce.
c) It will be allocative efficient because here the value of the goods produced and the value a viewed by the consumer are equal .
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Decide which type of efficiency is being demonstrated:
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