For productive efficiency to hold
A)price must equal the marginal cost of the last unit produced.
B)price must equal marginal revenue of the last unit sold.
C)average variable cost is minimized in production.
D)average total cost is minimized in production.

Question

Quizplus · Accepted Answer

Productive efficiency is achieved when the firm produces at the lowest possible cost. This occurs when the average total cost is minimized in production. Therefore, D is the correct choice. Choice A relates to allocative efficiency, and choice B relates to profit maximization. Choice C refers to the minimization of variable costs, not total costs.

For Productive Efficiency to Hold