A Level Economics - Economic Efficiency

Why would an economy wish to achieve economic efficiency?

• A to achieve an equal distribution of income

• B to achieve full employment

• C to ensure international competitiveness

• D to ensure resources are not wasted

The current distribution of goods between two individuals in a two-person economy with given technology and resources is at point X.

According to the Pareto criterion, which point would definitely indicate increased allocative efficiency?

• A

• B

• C

• D

The diagram shows the distribution of goods between two individuals in a two-person economy with given technology and resources. The economy is located at point X.According to the Pareto criterion, which point would definitely not increase allocative efficiency?

• A

• B

• C

• D

What would be one indicator of productive inefficiency in an economy?

• A an excess of imports over exports

• B prices in excess of marginal costs

• C rationing of certain goods and services

• D unemployment due to deficient aggregate demand

What is necessary to achieve Pareto efficiency?

• A Both consumers and producers must be made better off.

• B Everybody must be made equally better off.

• C One person must benefit without anyone else being worse off.

• D The welfare gains must exceed the welfare losses.

The diagram shows the average cost curves for a firm.

If a firm moved from point X to Y, what is most likely to happen to the productive efficiency and x-inefficiency of this firm?

• Productive efficiency increases and X-inefficiency increases

• Productive efficiency decreases and X-inefficiency increases

• Productive efficiency increases and X-inefficiency decreases

• None of the above

The diagram shows the cost and revenue curves for a firm. At which price does allocative efficiency occur?

• A

• B

• C

• D

Which type of efficiency is identified by price = marginal cost?

• A allocative

• B dynamic

• C productive

• D technical

The diagram shows a firm’s long-run cost and revenue curves.

At which level of output is the firm both allocatively and productively efficient?

• A OA

• B OB

• C OC

• D OD