Asked by Soleil Castaneda on Jul 28, 2024
Verified
Which would indicate that a firm is operating under conditions of pure competition and is being productively efficient?
A) It is making economic profits in the long run.
B) Marginal cost equals average variable cost.
C) It produces at the minimum average total cost.
D) Its marginal revenue is less than average revenue.
Productively Efficient
Refers to a situation where goods and services are produced at the lowest possible cost, and resources are utilized in the most efficient manner.
Pure Competition
A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information, allowing no single firm to influence the market price.
Average Total Cost
The total cost of production (fixed and variable costs combined) divided by the number of units produced.
- Identify the features indicating productive efficiency and allocative efficiency in pure competition.
Verified Answer
ZK
Zybrea KnightAug 02, 2024
Final Answer :
C
Explanation :
In a condition of pure competition and productive efficiency, a firm operates where its output level is at the minimum average total cost. This indicates the firm is producing goods at the lowest possible cost per unit, which is a key indicator of productive efficiency.
Learning Objectives
- Identify the features indicating productive efficiency and allocative efficiency in pure competition.