If for a firm P = minimum ATC = MC, then
A)neither allocative efficiency nor productive efficiency is being achieved.
B)productive efficiency is being achieved, but allocative efficiency is not.
C)both allocative efficiency and productive efficiency are being achieved.
D)allocative efficiency is being achieved, but productive efficiency is not.

Question

Quizplus · Accepted Answer

When P = minimum ATC = MC, the firm is achieving both productive efficiency (because it is producing at the lowest average total cost) and allocative efficiency (because the price equals the marginal cost, indicating that resources are allocated in a way that the value consumers place on a good is equal to the cost of producing it).

If for a Firm P = Minimum ATC = MC