After long-run adjustments, a purely competitive market achieves
A) productive efficiency but not necessarily allocative efficiency.
B) allocative efficiency but not necessarily productive efficiency.
C) either productive efficiency or allocative efficiency, but not both.
D) both productive and allocative efficiency.

Question

Quizplus · Accepted Answer

In the long-run, purely competitive markets will achieve both productive efficiency (when firms produce output at the lowest possible cost) and allocative efficiency (when the price of goods and services reflects the marginal cost of production). Therefore, the correct answer is D - both productive and allocative efficiency.

After Long-Run Adjustments, a Purely Competitive Market Achieves