Which of the following statements regarding the Hotelling rent is current? a. It reflects the opportunity cost of extracting the resource today instead of in the future. b. It is the reason that price is equal to marginal cost in the dynamic efficiency model. c. It reflects market power. d. It is the reason that price is lower than marginal cost in the dynamic efficiency model.

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Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).