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Therefore, productive efficiency is achieved at the lowest point on a firm’s long-run avarage total cost curve. In other words, costs per unit of production in the long run are as low as technically possible’.
Allocative efficiency can be achieved under one condition.‘To achieve allocative efficiency it should not be posssible to make someone better off by a reallocation of the resources without, at the same time, making someone worse off.’, ‘To achieve this situation, one key condition is that price should equal marginal cost.’
However the market structure in which the firm performs, often determines to a great extent its resources allocation, making both of these optimal efficiency criteria, extremely hard to fullfill simultaneusly...
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