Perfectly competitive firms produce up to the point where the price of the good equals the marginal cost of producing the last unit.This condition is referred to as
A)productive efficiency.
B)constant returns to scale.
C)allocative efficiency.
D)perfectly competitive efficiency.

Question

Quizplus · Accepted Answer

Allocative efficiency refers to the condition where the price of the good equals the marginal cost of producing the last unit. This is the point where the society's scarce resources are allocated efficiently and the consumers' preferences are satisfied. Therefore, option C is the correct answer. Option A, productive efficiency, refers to producing a good at the lowest possible cost. Option B, constant returns to scale, refers to the proportionate increase in output when all inputs are increased by the same proportion. Option D, perfectly competitive efficiency, is not a recognized economic term.

Perfectly Competitive Firms Produce Up to the Point Where the Price