Figure 9-20

-Refer to Figure 9-20.If the market price is P₁,what is the allocatively efficient output level?

Question

Figure 9-20
 
-Refer to Figure 9-20.If the market price is P₁,what is the allocatively efficient output level?

Quizplus · Accepted Answer

The allocatively efficient output level is where the demand curve (AR) intersects with the marginal cost curve (MC), which is at point Q₁. This is where society's marginal benefit equals the marginal cost of production. At this output level, the firm is neither overproducing nor underproducing, and resources are allocated efficiently.

Figure 9-20 -Refer to Figure 9-20.If the Market Price Is P₁,what Is