Dynamic efficiency is influenced by, for example, research and development, investment in human and non-human capital and technological change
Dynamic efficiency measures how well a market improves over time. It grows when firms invest in new technology, train workers, and develop better products or processes.
Real World
AstraZeneca invested over £5bn in R&D in 2023, developing new cancer treatments — a textbook example of dynamic efficiency improving welfare over time rather than just cutting today's costs.
Exam Focus
Give a specific driver (R&D, human capital) rather than just writing 'investment' — precision earns application marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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