efficiency's

• allocatively efficient

  ar = mc

  maximising consumer and producer surplus
• productive efficiency 


  occurs when producing at the lowest point on the ac curve ( mc = ar)

  normal profit is being made

  customers benefit from lower prices

  economies of scales are being exploited

  sales max

  market structures that are productively efficient

  perfect competition

  monopolistic in the long run
• x inefficiency

  occurs when you AC is higher than it could be

  this happens when:

  bad organisation

  no competition in the market

  bad management

  it is common in monopolies as less competition
• dynamic efficiency


  when a firm reinvest their profit made back into the business and used for research and development

  occurs only when making supernormal profit in the long run

  monopolies will be dynamically efficient
• static efficiency


  occurs when the firm is:

  productively efficient

  allocatively efficient

  x efficient