6 A farm producing wheat is operating in a monopolistically competitive market. Which one of the following will apply to this firm? ? A Allocative inefficiency in the long-run ? B Productive efficiency in the short-run ? C Supernormal profit in the long-run ? D Allocative efficiency in the short-run (Total for Question 6 = 1 mark) TOTAL FOR SECTION A = 6 MARKS
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Allocative efficiency refers to the situation where resources are allocated in a way that maximizes social welfare, meaning that the firm is producing the quantity of goods or services that society demands at the lowest possible cost. Show more…
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