Refer to Figure 26.5.Which firm is producing the allocatively efficient level of output and is using the least amount of economic resources to produce each unit of output?

Question

Quizplus · Accepted Answer

According to the graph, the allocatively efficient level of output is where the marginal cost curve intersects the demand curve, which is at a quantity of 20,000. Only firm B is producing at this quantity, meaning it is producing at the allocatively efficient level of output. Additionally, firm B has the lowest average total cost at this quantity, indicating it is using the least amount of economic resources to produce each unit of output. Therefore, the answer is C, firm B only.