Consider an industry with three profit-maximizing firms producing identical soccer jerseys.At their current levels of output,Firm A has a MC of $22,Firm B has a MC of $26,and Firm C has a MC of $27.Each firm is minimizing its costs for its given level of output.Which of the following statements is definitely true?
A)Each firm and the industry are productively efficient.
B)Each firm is productively efficient but the industry is not.
C)The industry is productively efficient but each firm is not.
D)Each firm is allocatively efficient but the industry is not.
E)Each firm and the industry are allocatively efficient.

Question

Quizplus · Accepted Answer

Each firm is minimizing its costs for its given level of output, indicating productive efficiency at the firm level. However, for the industry to be productively efficient, all firms should have the same marginal cost, which is not the case here.

Consider an Industry with Three Profit-Maximizing Firms Producing Identical Soccer