When a purely competitive firm is in long-run equilibrium, it is said to achieve allocative efficiency because
A)total revenue is at a maximum.
B)marginal cost equals marginal revenue.
C)average cost equals marginal cost.
D)average cost is at a minimum.

Question

Quizplus · Accepted Answer

In long-run equilibrium, a purely competitive firm achieves allocative efficiency when its marginal cost (MC) equals its marginal revenue (MR), indicating that resources are allocated in the most efficient way possible, producing the quantity of goods and services most desired by society.

When a Purely Competitive Firm Is in Long-Run Equilibrium, It