Suppose for a regulated monopoly that price equals minimum ATC but price exceeds MC.This means that:

Question

Quizplus · Accepted Answer

When price equals minimum ATC, productive efficiency is being achieved, as the firm is producing at the lowest possible cost. However, when price exceeds MC, allocative efficiency is not being achieved, as the price is above the marginal cost (where the social and private cost intersect), resulting in a deadweight loss. Therefore, the best choice is B, where productive efficiency is achieved but not allocative efficiency.

Suppose for a Regulated Monopoly That Price Equals Minimum ATC