What must be true 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 minimised in production.
D)Average total cost is minimised in production.

Question

Quizplus · Accepted Answer

Productive efficiency means producing output at the lowest possible cost. This occurs when average total cost is minimised in production. Therefore, choice D is the correct answer. Choices A and B refer to allocation efficiency, not productive efficiency. Choice C refers to minimising variable costs, not total costs.

What Must Be True for Productive Efficiency to Hold