For productive efficiency to hold,
A) price must equal the marginal cost of the last unit produced.
B) price must equal marginal revenue of the last unit sold.
C) average variable cost is minimised in production.
D) average total cost is minimised in production.

Question

Quizplus · Accepted Answer

Productive efficiency is achieved when a firm produces at the minimum average total cost (ATC). This means that the firm is producing at the lowest possible cost per unit of output. Therefore, productive efficiency is achieved when the firm minimizes its average total cost (ATC) in production, which is option D. Options A and B refer to the pricing decisions of the firm and do not directly relate to productive efficiency. Option C refers to the minimization of average variable cost (AVC) rather than ATC.

For Productive Efficiency to Hold