TO YOUR right you can see a new poll. |t is a MCQ taken from a Module 1 examination. I have chosen it because the topic of efficiency is key to being successful in the exam.
Markets (free) are efficient when they work well, providing both the correct amounts of goods required (allocative efficiency) and causing production to happen with the lowest possible amount of resources which is often the same as producing with lowest costs (productive efficiency).
The ability of a free market to self-correct and reach equilibrium can lead to allocative efficiency. Competition drives down costs and may cause productive efficiency.
Markets fail when certain problems (monopoly power, externalities, information failure, etc) stop them from being efficient. When this happens governments may take action to try and correct the problem.
UNDERSTANDING THIS IS ABSOLUTELY CRUCIAL TO DOING WELL AT MODULE 1
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment