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3.5 What is meant by efficiency?


What students need to learn:

Content
Students should be able to:
Additional Guidance Notes
Productive and
allocative efficiency
Understand and distinguish between productive and allocative efficiency.
Students will be required to know that the minimum point on the average total cost is the most productively efficient point and that allocative efficiency occurs where price is equal to marginal cost.

Students should also understand the meaning of inefficiency eg, x-inefficiency.

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