Under pure competition, in the long run
A)neither allocative efficiency nor productive efficiency is achieved.
B)both allocative efficiency and productive efficiency are achieved.
C)productive efficiency is achieved, but allocative efficiency is not.
D)allocative efficiency is achieved, but productive efficiency is not.

Question

Quizplus · Accepted Answer

In a purely competitive market, firms achieve both allocative efficiency, where resources are allocated to their most valued uses, and productive efficiency, where goods are produced at the lowest possible cost, in the long run. This is due to the pressure of competition forcing firms to minimize costs and price their products equal to marginal costs.

Under Pure Competition, in the Long Run