A perfectly competitive industry achieves allocative efficiency in the long run. What does allocative efficiency​ mean?   A. Firms use an input combination that minimizes cost and maximizes output.   B. Production occurs at the lowest average total cost.   C. Each firm produces up to the point where the price of the good equals the marginal cost of producing the last unit.   D. Each firm produces up to the point where all scale economies are exhausted.

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Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).