ECON 208 Chapter Notes - Chapter 12: Pareto Efficiency, Product Differentiation, Fixed Capital
![ECON 208 Full Course Notes](https://new-docs-thumbs.oneclass.com/doc_thumbnails/list_view/2155382-class-notes-ca-mcgill-econ-208-lecture5.jpg)
27
ECON 208 Full Course Notes
Verified Note
27 documents
Document Summary
Efficiency requires factors of production to be fully employed; however, there may still be waste of resources since factors of production may be used inefficiently: If firms don"t use the least-cost method of producing their chosen outputs = firms inefficient (cost for a single firm producing some level of output) If the mc of production isn"t the same for every firm in an industry = industry inefficient (total cost for all the firms in an industry) If too much of one product and too little of another product are produced = economy"s resources used inefficiently (level of output of one product compared with another) Productive efficiency for the firm: when the firm chooses among all available production methods to produce a given level of output at the lowest possible cost. Sr only 1 variable factor firm uses enough of the variable factor to produce the desired level of output.