Asked by Karen Vinci on Jun 29, 2024
Verified
What economic conditions are necessary to achieve productive efficiency under pure competition?
Productive Efficiency
A situation where a firm produces goods at the lowest possible cost, utilizing all of its resources fully and effectively.
Pure Competition
A market structure characterized by a large number of small firms producing identical products, with no single firm having the market power to influence prices.
Economic Conditions
The state of an economy at a given time, including variables such as inflation, unemployment rates, GDP growth, and consumer spending patterns.
- Recognize the conditions necessary for achieving productive efficiency in a purely competitive environment.
Verified Answer
MA
Mohaned AhmedJun 30, 2024
Final Answer :
Productive efficiency requires that goods be produced in the least costly way. In the long run, pure competition forces firms to produce at the minimum average total cost of production and to charge a price that is just consistent with that cost. Firms that do not use the best available (least-cost)production methods and combinations of inputs will not survive.
Learning Objectives
- Recognize the conditions necessary for achieving productive efficiency in a purely competitive environment.