Efficiency

Productive Efficiency:

• This occurs at the bottom of the average cost curve
• Depends on reaping all available economies of scale.
• Occurs at the minimum point on the AC curve

Allocative Efficiency:

• Occurs when a firm produces a range of goods using scarce resources in such a way as to meet the demands of customers.
• Firms will charge a price equal to the marginal cost of manufacturing the good.
• Price = MC

Technocal Efficiency:

• This is when any given output is produced with…