market structure, efficiencies,allocation

• Static efficiency

  Efficiency of resource allocation and production at a specific amount of time
• Dynamic efficiency

  When resources are allocated efficiently over time and rate of innovation is at optimum level- leads to falling LRAC- takes place over time
• Research and development

  Allows firms to discover or improve new products/technological and it influences RD because it enables firms to stay ahead of other firms by continuously improving its goods and services and these investments into RD allow the firm to investment in more efficient production methods- increase firms overall efficiency
• Investment in human capital

  Improves the quality and productivity of the labour force- enhancing the firms innovation and its ability to achieve dynamic efficiency
• Investment in non-human capital

  Supports technological advancements- if they reinvest profits into capital and use these in production then it contributes to the firms dynamic efficiency and gives the firm a competitive advantage
• Technological change

  Leads to efficiency and reduces cost for firms and enables continuous innovation and competitiveness. This influences dynamic efficiency because it reduces costs and improve allocation of resources and drives innovation on goods and services, therefore making the firm more competitive through investment into technological advancements
• Conditions required for productive efficiency

  • Technical efficiency
  • Economies of scale
  • Effective resource allocation
• Conditions required for allocative efficiency

  • Perfect competition
  • Monopoly and monopolistic competition
  • Pricing at marginal cost-pricesd charged to consumers reflectstrue cost of production