The marginal benefit of an additional beach towel is $10. Themarginal cost of producing an...

The marginal benefit of an additional beach towel is $10. The marginal cost of producing an additional beach towel is $10. If producers are not minimizing the average costs of production, then we can conclude:

beach towel production is neither allocatively nor productively efficient.
beach towel production is allocatively efficient but not productively efficient.
beach towel production is not allocatively efficient but is productively efficient.
beach towel production is both allocatively and productively efficient.

Expert Solution

Ans. beach towel production is allocatively efficient but not productively efficient.

Explanation
For allocative marginal cost should equal marginal benefit.
For productive efficiency, the good shoudl be prodcued at the lowest cost.

Rahul Sunny answered 2 years ago

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