Match each market efficiency concept on the left with its defining market condition or outcome on the right.
- Allocative EfficiencyAchieved when price equals marginal cost ()
- Productive EfficiencyAchieved when output is produced at the minimum point of average total cost ()
- Excess CapacityOperates to the left of the minimum average cost output level in long-run equilibrium
- Monopoly Deadweight LossLoss of consumer and producer surplus caused by restricting output below the competitive level
Answer
Allocative Efficiency matches with 'Achieved when price equals marginal cost ()'; Productive Efficiency matches with 'Achieved when output is produced at the minimum point of average total cost ()'; Excess Capacity matches with 'Operates to the left of the minimum average cost output level in long-run equilibrium'; Monopoly Deadweight Loss matches with 'Loss of consumer and producer surplus caused by restricting output below the competitive level'.
Each concept correctly maps to its defined economic criterion: Allocative efficiency is defined by , productive efficiency by , excess capacity by producing below minimum capacity, and deadweight loss by the loss of welfare due to monopoly restriction.
Step-by-Step Solution
Key Concept
Economic Efficiency and Welfare Criteria across Market Structures