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Charon Matthews
on Nov 27, 2024

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After long-run adjustments, a purely competitive market achieves

A) productive efficiency but not necessarily allocative efficiency.
B) allocative efficiency but not necessarily productive efficiency.
C) either productive efficiency or allocative efficiency, but not both.
D) both productive and allocative efficiency.

Allocative Efficiency

A state of the economy in which resources are apportioned in a way that maximizes the overall benefit to society.

Productive Efficiency

A situation where an economy or a production entity cannot produce more of one good without sacrificing production of another good and by using the least costly production techniques.

Long-Run Adjustments

The process by which firms adjust their production levels, input mixes, and operations to reflect changes in the market or economic conditions over a longer period.

  • Differentiate between productive and allocative efficiency in the context of a purely competitive market.
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JT
Jacob Twum-KorantengDec 03, 2024
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