4.1.5.10 Market structure, static efficiency, dynamic efficiency and resource allocation Quiz: AQA Economics, Unit 1

The 20 questions

1. Which term refers to resource allocation efficiency at a single point in time?

   • Static efficiency
   • Dynamic efficiency
   • Macroeconomic efficiency
   • X-efficiency

2. Which type of efficiency is achieved over time through innovation and investment?

   • Productive efficiency
   • Static efficiency
   • Dynamic efficiency
   • Allocative efficiency

3. At what point on its cost curve does a firm achieve productive efficiency?

   • Minimum average cost
   • Maximum marginal revenue
   • Price equals cost
   • Minimum marginal cost

4. What condition must be met for a market to achieve allocative efficiency?

   • Marginal revenue equals zero
   • Price equals average cost
   • Output equals minimum AC
   • Price equals marginal cost

5. Which business expenditure directly promotes dynamic efficiency in a firm?

   • Research and development
   • Raw material purchases
   • Dividend payouts
   • Short-run advertising

6. Investment in human capital improves dynamic efficiency primarily by improving what?

   • Short-run marginal costs
   • Market contestability
   • Economies of scale
   • Workforce skills

7. If a market has a price of £12 and a marginal cost of £8, is allocative efficiency achieved?

   • Uncertain
   • Yes
   • Always
   • No

8. Is a firm producing at £20 average cost when minimum average cost is £16 productively efficient?

   • No
   • Potentially
   • Yes
   • Partially

9. When comparing market structures, what does firm 'conduct' refer to?

   • Firm behaviour
   • Industry size
   • Market profits
   • Allocative efficiency

10. What enables a monopoly to invest heavily in research to gain dynamic efficiency?

    • Supernormal profit
    • Normal profit
    • Government subsidies
    • Tax rebates

11. Why might a perfectly competitive market struggle to achieve dynamic efficiency?

    • Lack of consumer surplus
    • High barriers to entry
    • Lack of supernormal profit
    • Excess production capacity

12. Long-run efficiency gains resulting from research and development illustrate which economic concept?

    • Allocative efficiency
    • Productive efficiency
    • X-inefficiency
    • Dynamic efficiency

13. What effect does technological progress over time have on a firm's average cost curves?

    • Shifts them upwards
    • Shifts them downwards
    • Moves along them
    • Keeps them constant

14. At which point on a firm's average total cost curve does productive inefficiency occur?

    • Above minimum ATC
    • At zero profit
    • At marginal cost
    • At minimum ATC

15. Allocative inefficiency occurs in a market when price is greater than which cost?

    • Fixed cost
    • Total cost
    • Marginal cost
    • Average cost

16. Which spending metric is used as an indicator of dynamic efficiency?

    • R&D spending ratio
    • Current wage bill
    • Short-run marginal cost
    • Dividend payment rate

17. When price equals both marginal cost and minimum average total cost, which efficiencies exist?

    • Productive and dynamic
    • Static and dynamic
    • Productive and allocative
    • Dynamic and allocative

18. Static efficiency evaluates market performance at a single point in time, ignoring which factor?

    • Current market price
    • Immediate resource use
    • Innovation over time
    • Short-run marginal cost

19. Compared to perfect competition, monopolies are typically less allocatively efficient but potentially more what?

    • X-efficient
    • Productively efficient
    • Statically efficient
    • Dynamically efficient

20. Investment in which asset is an example of non-human capital driving dynamic efficiency?

    • Management education
    • Staff training programmes
    • Automated machinery
    • Worker health schemes

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