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Economics for Business Product Efficiency Assignment

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Added on  2020-04-01

Economics for Business Product Efficiency Assignment

   Added on 2020-04-01

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Running head: ECONOMICS FOR BUSINESSEconomics for BusinessName of the StudentName of the UniversityAuthor note
Economics for Business Product Efficiency Assignment_1
1ECONOMICS FOR BUSINESSTable of ContentsAnswer 2..........................................................................................................................................2Productive Efficiency..................................................................................................................2Competitive firm and Productive efficiency................................................................................2Allocative Efficiency...................................................................................................................3Competitive firm and Allocative efficiency................................................................................3Answer 3..........................................................................................................................................4Price and Output comparison between monopoly and competitive industry..............................4Inflation in Pakistan.....................................................................................................................5Answer 4..........................................................................................................................................6References........................................................................................................................................9
Economics for Business Product Efficiency Assignment_2
2ECONOMICS FOR BUSINESSAnswer 2Productive Efficiency Productive efficiency refers to a situation where goods and services are produced withoptimal input combination and are associated with lowest cost. In this condition, increase inproduction of one good requires sacrifice of production of some other good. A point on theproduction possibility curve is an example of productively efficient point. Competitive firm and Productive efficiency Competitive firms achieve productive efficiency in the long- run. The competitive firms,in the long-run operate at the minimum point of average cost. The productivity efficiency isachieved because of free entry and exit of firms. If firm operates above the average cost thenthere is supernormal profit, which encourages entry of new firms in the industry. On the otherhand, when firm operates below average cost then there is economic loss and then firms exitfrom the industry. The adjustment continues until all the firms earn only normal profit byproducing at the minimum point of average cost. Hence, productive efficiency is reached.
Economics for Business Product Efficiency Assignment_3

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