Micro questions (1 Viewer)

[dathat]

Could anyone help me with these two:
1. Distinguish between microeconomic reform and structural change (2)

2. Explain the link between microeconomic policy and the level of efficiency in product market (2)

I know they are from cssa but i don't have the answers.
Q2 made me think if allocative, technical, dynamic efficiencies are all efficiency in the factor market?

thankss

 

[godofindolence]

Just my 2 cents

1) Structural change is a sustained change in the ways goods and services are produced within an economy as a response to changes in technology and consumer demand etc. Microeconomic policy however are government policies that seeks to maximise efficiency, which is accomplished through reforms and deregulation, that instigate structural change.

2) Microeconomic policy (reduction of distortions like regulation and protection through structural change), result in more accurate pricing and distribution of resources through the price mechanism, improving dynamic and allocative efficiency. Linking productivity to wage growth increases technical efficiency whilst also reducing inflation rates. And microeconomic policy like spending on education increases general skill level, and results in increased technological innovations that also improves technical efficiency, resulting in more efficient production of goods in the product market.

Labour market reforms and financial deregulation are examples of microeconomic policy in the factor markets, but remember those factors of productions are inputs within the production process.


Someone please correct me if I'm wrong, or if this can be improved.