If a firm makes production decisions such that it achieves maximum output from a fixed stock of resources, this means that this firm is
A) achieving allocative efficiency
B) earning a positive economic profit
C) earning a normal profit
D) technically efficient

Question

Quizplus · Accepted Answer

The firm is achieving technical efficiency, which means it is using its resources to produce the highest possible output level. Allocative efficiency, earning a positive economic profit, and earning a normal profit are not necessarily achieved by maximizing output from a fixed stock of resources.

If a Firm Makes Production Decisions Such That It Achieves