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Market Structures and Efficiency Explained

Market structures a-level econ

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jessmgaffney
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11 views2 pages

Market Structures and Efficiency Explained

Market structures a-level econ

Uploaded by

jessmgaffney
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Market structures

Efficiency’s
Pro t max MC=MR Mc
• normal pro t
(break even) AC
AR=AC
allocatively
• supernormal efficiency
pro t (abnormal
oooo's
ar mo
Dynamic
a
pro t) AR>AC efficiency
• Subnormal pro t reproductive'S
(loss) AR<AC x efficiency
onacminimising
i efficiency
costs are minotAC
AR
MR
Allocative efficiency
P - there is allocative ef ciency
C - maximing society’s surplus, consumer wants, resources perfectly follow consumer demand
C - Consumers; lower prices and increased quantity, increased consumer surplus, increased
quality and choice,
Firm; get ahead of rivals, rms agin or maintain market share

Productive efficiency
P - productive and x ef ciency
C - full exploitation of economies of scale, rm minimises waste (excess costs)
C - consumers; lower prices, increased consumer surplus
Firms; wider pro t margins as reduced AC, get ahead of rivals, increased market share

Dynamic efficiency
P - dynamic ef ciency
C - LR supernormal pro t reinvested e.g. technology advances
C - consumers; brand new better quality products, reduced prices over time, increased choice
Firms; gain monopoly power through patents of new products, increased market share,
reduced costs

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