10. Productive and allocative efficiencyWhich of the following conditions guarantee that a firm will achieve productive efficiency in the long run? Check all that apply.There are multiple firms in the market.The total cost of production is equal to the total benefit to consumers on all units sold.The market price is equal to the minimum long-run average cost.The market for its product is perfectly competitive.

Answered: 10. Productive and allocative…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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10. Productive and allocative efficiency
Which of the following conditions guarantee that a firm will achieve productive efficiency in the long run? Check all that apply.
There are multiple firms in the market.
The total cost of production is equal to the total benefit to consumers on all units sold.
The market price is equal to the minimum long-run average cost.
The market for its product is perfectly competitive.

Expert Solution

Step 1: Define productive efficiency

A firm is performing efficiently whenever its overall production units are effectively consumed. It is also a condition where the firm reaches equilibrium, which means that the production level of the firm exactly matches the requirements of the consumers. Hence, there is no welfare or resource loss. This is termed production efficiency.

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