DP Economics Questionbank

Using the relationship P = AR > MR > AC > MC and/or figures provided in Table 1:

Determine whether Firm A is productively efficient at the current level of output. You must give a reason for your choice.

Using the relationship P = AR > MR > AC > MC and/or figures provided in Table 1:

Explain why allocative efficiency is achieved, in the absence of externalities, at a level of output where price (average revenue) is equal to marginal cost.

Identify the level of output at which the firm would achieve productive efficiency.