In a purely competitive industry, an optimal allocation of scarce resources occurs when
A)P = AC.
B)P = MC.
C)MR = AC.
D)TR = TC.

Question

Quizplus · Accepted Answer

In a purely competitive industry, an optimal allocation of resources occurs when the price (P) equals the marginal cost (MC) of production. This condition ensures that resources are allocated efficiently, as firms produce up to the point where the cost of producing one more unit equals the price that unit can be sold for, maximizing societal welfare.

In a Purely Competitive Industry, an Optimal Allocation of Scarce