Is a market output that is less than the competitive output efficient (efficient in output)? Explain...

Is a market output that is less than the competitive output efficient (efficient in output)? Explain why or why not. Is a market output that is greater than the competitive output efficient? Explain why or not.

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Answer:

Efficiency refers to a peak level of performance that uses the least amount of inputs to achieve the highest amount of output. Competitive output is efficient in long-run because goods are being produced and sold at the lowest possible average cost. A perfectly competitive firms maximize their profits by producing the quantity where P= MC. When a market output that is less than competitive output NOT efficient. When a market output that is less than competitive output do not utilize the resources and input at optimal level and its increase wastage and operating cost. Its decrease the social welfare or satisfaction level of the society and surplus.

If s a market output that is greater than the competitive output efficient because its a peak level of performance that uses the least amount of inputs to achieve the highest amount of output. Its is efficient for the following reasons - First, resources are allocated very efficiently, fairly to their best alternative use. Second, they maximum satisfaction level of the society. Normally the the competitive output efficient and if, the market perform better than it then it increase social welfare.

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Rahul Sunny answered 1 year ago

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