Some terms that encompass phases of economic efficiency includeallocative efficiency, productive efficiency, distributive efficiency, andPareto efficiency. A state of economic efficiency is essentially theoretical; a limit that can be approached but never reached. Instead, economists look at the amount of ...
Allocative Inefficiency:It occurs when the cost of producing a product does not match the price at which it is sold in the market. It leads to ineffective resource allocation and reduced overall profits. Informational Inefficiency:It occurs when one side of the market (demand or supply) has mor...
b. Which types of industries come closest to perfect competition in the real world? Describe how firms in perfect competition achieve both allocative and productive efficiency. What is the difference between perfect competition in the short run and...
Efficiency Concerns:Monopolies may restrict output to maximize profits, leading to potential allocative inefficiency. Characteristics of Monopoly Single Seller:Only one firm supplies the entire market demand. Unique Product:No close substitutes are available to consumers. ...
Monopolies represent a significant market structure where a single firm controls the supply of a unique product or service. While they can lead to innovation and economies of scale, monopolies also raise concerns about market power, consumer welfare, and economic efficiency. Understanding the dynamics...