An industry's output is produced at the lowest possible cost when
A) firms' marginal costs are equal.
B) firms minimize their average costs.
C) all firms earn the same profit.
D) output is evenly divided among the industry's firms.

Question

Quizplus · Accepted Answer

When firms' marginal costs are equal, the industry is producing at the lowest possible cost because resources are allocated efficiently, ensuring that no firm can produce additional output at a lower cost than another.

An Industry's Output Is Produced at the Lowest Possible Cost