Economic efficiency
What Economic efficiency means in Economics A-Level, as defined for AQA.
Definitions of Economic efficiency
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Reference: AQA
An advantage of the price mechanism, described as allocative efficiency, where production is matched to consumer demand and consumer choices dictate production.
Productive and dynamic efficiency that firms are forced to improve by increased competition, driving innovation and improving the quality of goods and services.
Achieved in the long run through allocative efficiency, where price equals marginal cost, and productive efficiency, where minimum average cost is reached.
The standard provided by perfect competition, in both product and labour markets, for judging how well real world markets perform.
Topics that use Economic efficiency
- How markets and prices allocate resources (AQA A-Level)
- Perfect competition (AQA A-Level)
- Trade (AQA A-Level)
Related terms
- Allocative efficiency
- Asymmetric information
- Average revenue
- Barriers to entry
- Comparative advantage
- Deadweight welfare loss
- Dynamic adjustment
- Dynamic efficiency
Using Economic efficiency in the exam
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