Discuss whether economic efficency as described in text books is likely to be achieved in practice.
Title: Discuss whether economic efficency as described in text books is likely to be achieved in practice.
Category: /Literature/Poetry
Details: Words: 462 | Pages: 2 (approximately 235 words/page)
Discuss whether economic efficency as described in text books is likely to be achieved in practice.
Category: /Literature/Poetry
Details: Words: 462 | Pages: 2 (approximately 235 words/page)
In an economy, there are many types of efficency. X inefficency, allocative efficency where MC=MR and paretian efficenct where production is at the production curve. There is also saocial efficency where MPC=MSB+MEB. These can be MEC achieved in reality or not.
X inefficncy is where the firm is producing efficiently. The processes, the combination of factors are used perfectly. This is where AC is lowest. The truth is this is really difficult …showed first 75 words of 462 total…
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…showed last 75 words of 462 total…MPC = MSB+MEB. Firms will definitely not always go by the rule and the marginal external benefit or cost is usually ignored and not paid for.
Thus in theory the efficency can be achieved at times but individual firms might not want to have it as a goal because of for want of profit that is not guaranteed in some cases.
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