The requirement for efficiency is that A) MD = MAC B) MD MAC C) MD

Question

The requirement for efficiency is that
A) MD = MAC
B) MD > MAC
C) MD < MAC
D) MD and MAC are not part of efficiency

Quizplus · Accepted Answer

Efficiency occurs when the marginal cost (MC) of producing a good or service is equal to the marginal benefit (MB) that it provides to consumers. In this case, the requirement for efficiency is that the marginal cost (MC) is equal to the marginal benefit (MB), or in other words, that the marginal cost (MC) is equal to the marginal revenue (MR), which is equivalent to the price (P) of the good or service in a perfectly competitive market. Therefore, the statement MD = MAC (where MD is the marginal revenue curve and MAC is the marginal cost curve) represents the condition for efficiency in a perfectly competitive market.

The Requirement for Efficiency Is That