roosters4sale
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Is a firm operating in a perfectly competitive market both productively and allocatively efficient in both the short run and long run??

Im confused

Please quote me in your answer! thanks!
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(Original post by roosters4sale)
Is a firm operating in a perfectly competitive market both productively and allocatively efficient in both the short run and long run??Im confusedPlease quote me in your answer! thanks!
A perfectly competitive firm is not productively efficient in the short run, as it won't produce where marginal cost and average cost are equal in order to profit maximise. However, it will be allocatively efficient in the short run, as marginal cost will equal marginal revenue. In the long run, the firm would be both productively and allocatively efficient, as MC=AC and MC=MR.
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