Under perfect competition, the efficient level of output is produced because
A) government regulates the output level that must be produced.
B) firms earn only a normal profit in the long run.
C) firms can earn an economic profit in the long run.
D) price equals marginal cost.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the efficient level of output is achieved when the price of the product equals the marginal cost of production. This ensures that resources are allocated in the most efficient manner, where the cost of producing the last unit is exactly equal to what consumers are willing to pay for it.

Under Perfect Competition, the Efficient Level of Output Is Produced