Asked by Karina Goldberg on Jul 15, 2024
Verified
In pure competition, resources are optimally or efficiently allocated when production occurs at the output level where P = MC.
Pure Competition
A market structure characterized by a large number of sellers and buyers, free entry and exit, and a product that is homogeneous across producers.
P = MC
An economic condition where price equals marginal cost, indicating optimal resource allocation in perfectly competitive markets.
Optimally Allocated
Refers to the distribution of resources in a manner that maximizes efficiency and effectiveness, often resulting in the best possible outcome.
- Recognize the allocation efficiency in pure competition where production occurs at the output level where P = MC.
Verified Answer
NG
Nishad GeorgeJul 17, 2024
Final Answer :
True
Explanation :
In pure competition, optimal allocation of resources occurs when the price (P) equals the marginal cost (MC) of production, ensuring that goods are produced up to the point where the last unit provides a benefit equal to its cost of production.
Learning Objectives
- Recognize the allocation efficiency in pure competition where production occurs at the output level where P = MC.