Question

the marginal benefit of an additional beach towel is $12 the marginal cost of producing an additional beach towel is $8 as producers are minimizing the average cost of production and we can conclude.A. beach towel production is allocatively efficient than not productively efficient.B. Beach Tower production is not allocatively efficient but is productively efficient.C. beach towel production is neither allocatively nor productively efficientD. beach towel production is both allocatively and productively efficient

Answer 1

The correct answer is D. beach towel production is both allocatively and productively efficient.

Step-by-step explanation:

Productive efficiency (also known as technical efficiency) occurs when the economy is using all its resources efficiently, producing maximum production with minimum resources. The concept is illustrated in the Production Opportunities Frontier (FPP) in which all points of the curve are the points of maximum productive efficiency (that is, no more products can be achieved from the present resources).