Allocative Efficiency and Dynamic Efficiency

1.2 Suppose the consumption of a good entails rather sizable spillover benefits. How might the resulting misallocation of resources be corrected?

Efficiency: Whatever idea, thought, plan or action we do, must be efficient enough to make us reach our set goal.

which seeks to achieve maximum efficiency and, if a suitable supply and demand is established,

Efficiency refers to a business’ ability maximise output (customer service) by minimising cost of operations and time required to complete required tasks. This ratio measures total expenses as a proportion of total revenue. It decreased slightly from %99 to %98 this year but is substantially strong like other airline (singapore airline %99). One of the main startegies qantas has undertaken to be effefctive with increaseing there efficiecny would be there use of RSF (revenue seat factor) which is used as a key indicator of efficiency. It measures the percentage of total passenger capacity actually utilised by paying passengers. Other startegies include:

MUx/Px equals 40/4= 10 < 15 = 30/2 = MUy/Py The consumer should decrease consumption of X. 4+2=6/2= 3 X is $1 less than an increase Y is $1 more than X works out to be

It relates how inputs and money are dispersed across sectors with the total benefits received. A market experiences allocative inefficiency if the funds being used in that market could be used in a different market that creates a higher level of consumer benefits. Within the healthcare system, allocative inefficiency is experienced if the money spent on healthcare could be used elsewhere in order to experience a higher total benefit from the money. Allocative inefficiency within healthcare results when consumers are consuming above the optimal level of healthcare. This means that U.S. consumers are either consuming an excessive amount of healthcare, or consuming at costs that are much too high relative to the benefit (Garber and Skinner 36). The funds that are creating little to no marginal benefit in the healthcare market could be used somewhere else to gain a higher benefit.

| Duopolists A and B face the following demand curves: QA = 120  2PA + PB and QB = 120  2PB + PA. If both firms have zero marginal cost and they form a cartel, what is the profit-maximizing price and quantity?Answer

Productive efficiency occurs when the firm produces its output at the least possible cost per unit. This requires the firm to produce at the minimum point of its long-run average cost curve. Allocative efficiency occurs when the goods that are being produced are the ones consumers most prefer. In order to achieve these efficiencies, firms are required to produce where price (which measures the consumers marginal valuation of the last unit of the product) equals marginal cost (which measures the opportunity cost of using resources to produce the last unit).

On the one hand, we see that efficiency in economics is based on the concept that resources are scarce and they must be distributed to the population in an ideal way all the while limiting the amount of waste they produce (Investopedia, 2015). On the other hand, we see that equity in economics concerning this case would be the amount of investment involved and who would its end up as the beneficiaries (Investopedia, 2017). However, when you apply the two concepts together you have a quandary of sorts, since the amounts of benefits to apply are not going to be equally distributable (Investopedia,

Define the concept of scarcity: Scarcity: The goods available are too few to satisfy individuals' desires. Scarcity is a central concept in economics. Resources are scarce if any individual would prefer to have more of that good or service than they already have. Most goods and services are scarce - those that are not are known as free goods. Where goods are scarce it is necessary for society to make choices as to how they are allocated and used. Economists study (among other things) how societies perform the optimal

Efficiency is important to producers, consumers, and society as a whole because the resources are scarce. The people have to decide to use the resources to increase its benefits. When a resource are used to produce goods and services it make it hard to use for another goods and services. So the best way to understand economy is to allocation resource is to produce more goods. In this type of economy production possibilities frontier (PPF) graph can be shown of the production of two goods. Producers could lose money if they produce a good and the demand of the produce is low because less people are going to buy the product. This effect consumer by how high and low the demand is. If the demand is high then the price of the goods is low. If the demand is low then the price of the goods is high.

Economics 339, A01, CRN 12913 Assignment 2 Dr. L. Welling November 16, 2012 Assignments are due at the beginning of class on the due date. Remember to use at least ½ page for each diagram. 1. (25 marks) Juanita derives utility from both leisure (L) and food (G). She has 18 hours per day which she can divide between leisure and preparing meals (H). Her ability to prepare meals is described by the function G=g(H;X), and displays positive but diminishing marginal productivity of H. a) (4 marks) In a diagram with leisure on the horizontal axis, sketch Juanita’s consumption set (her feasible combinations of food and leisure). b) (2 marks) What is the economic interpretation of the slope of the feasible set? Ans: slope gives the (negative of

Since the capacity is being expanded to increase production of Product C, it could be assumed that this increase should be allocated to this product. Production of Product A is to be scaled down, but its level of

There are 3 ways of target the allocation problem of externalities, I talked about regulations,

Using the same amount of resources to produce two goods. Draw PPF curve and explain the reason of each question.