Figure 7-16 -Refer to Figure 7-16.If the market price is P₁,what is the allocatively efficient output level? A) Q₀ B) Q₁ C) Q₂ D) There is no allocatively efficient output level because the firm is incurring a loss.

Question

Quizplus · Accepted Answer

Allocative efficiency occurs where marginal cost equals marginal benefit. At the given market price of P₁, marginal cost is equal to marginal benefit at an output level of Q₁, which is the point where the firm's marginal cost curve intersects the demand curve.

Figure 7-16 -Refer to Figure 7-16.If the Market Price Is P1,what Is

Figure 7-16 -Refer to Figure 7-16.If the Market Price Is P₁,what Is