Productive efficiency occurs when firms charge a price that is equal to AC.

Question

Quizplus · Accepted Answer

Productive efficiency occurs when a firm produces output at the lowest possible cost, which is achieved when the firm produces at the minimum point of its average cost curve. When a firm is producing at the minimum point of its average cost curve, its price is equal to its average cost, which means that it is charging a price that is equal to AC. Therefore, option A is correct.

Productive Efficiency Occurs When Firms Charge a Price That Is