Suppose a perfectly competitive firm faces the following situation: P = $9; output = 4,000; ATC = $8; AVC = $6; and MC = $9. Is this firm's industry allocative efficient?
A) No, the firm is not allocative efficient because ATC is not equal to MC.
B) No, the firm is not allocative efficient because P is not equal to MC.
C) Yes, the firm is allocative efficient because P > ATC.
D) Yes, the firm is allocative efficient because P = MC.
Correct Answer:
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