Question

If a perfectly competitive firm achieves productive efficiency then Group of answer choices the price of the good it sells is equal to the benefit consumers receive from consuming the last unit of the good sold. it will raise its price in order to earn an economic profit. it is producing at minimum efficient scale. it is producing the good it sells at the lowest possible cost.

Answer 1

it is producing at minimum efficient scale

Step-by-step explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

Due to the ease of entry and exit in a perfectly competitive market, in the long run, price is equal to the minimum point of the long run average cost curve.