If a market is productively efficient,
A)the output is being produced at the lowest possible resource cost
B)the output is selling for the lowest possible price
C)economic profit in the market is positive
D)the output being produced is what consumers want
E)no firm can earn a normal profit

Question

Quizplus · Accepted Answer

Productive efficiency means that output is being produced with the lowest possible resource cost, which implies that resources are being used in the most efficient way. This leads to lower costs for producers, which in turn can lead to lower prices for consumers. However, the price level is not a necessary component of productive efficiency. Economic profit being positive or no firm earning normal profit are unrelated to productive efficiency, while the output being what consumers want is more related to allocative efficiency.

If a Market Is Productively Efficient