Market Structures and Economic Efficiency | Paper 1 (2022) Summary Revision

This short revision video summarises the likely consequences for economic efficiency in the three key market structures you need to revise for Paper 1 (2022) - monopoly, oligopoly and contestable markets.
#economics #alevels2022 #efficiency
Timestamps:
0:00 Introduction
0:45 When does allocative efficiency happen?
1:28 When does productive efficiency happen?
2:16 What do we mean by dynamic efficiency?
3:00 Summary of likely efficiency outcomes for contestable markets, oligopoly and monopoly

[@tutor2u-official]

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[@master4755]

5:24 Could you also argue the negatives of price discrimination? At profit max price in monopoly, the remaining area of consumer surplus can be eroded into monopoly profit throught 1st degree price discrimination, hence worsening outcomes for consumers -->more allocatively inefficient (could have greater regressive effects too)

[@tutor2u-official]

Superb analysis that would feed into top quality evaluation

[@xylor2896]

Would it be possible for you to outline why exactly a net welfare loss is an issue when regarding allocative efficiency, or more exactly the lack thereof, as even though I am able to mention that, I don't really know the tremouring consequences of such?

[@pauloconnor3056]

It could be, that deadweight welfare loss means there is a loss in consumer and producer surplus because of an inefficient level of production. which is a bad thing. Also, economics is concerned with the allocation of scarce and productive resources to satisfy peoples needs and wants. Moving away from allocative efficiency doesn't do that. (I'm not too sure myself though.)

[@tutor2u-official]

Absolutely top answer. High prices reduce the quantity bought by consumers and often these are products essential to a decent standard of living - think having to pay over the odds for routine medicines, food and drink and transport to and from school and college.

[@gurshaang1596]

How can contestable markets achieve dynamic efficiency if they only make normal profits ?

[@Salsanchez_]

How are monopoly’s productively efficient

[@tutor2u-official]

They might be able to achieve economies of scale that smaller businesses struggle to reach.

[@Salsanchez_]

@@tutor2u-official that makes sense but they don’t produce at the bottom of AC? or do you mean compared to the other firms in the monopoly industry they are more productively efficient