Principles of Microeconomics / Unit 7 MIC 0634 short lesson, about 20 seconds
Productive Efficiency in Competition
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The idea
Productive efficiency means producing at the lowest possible average cost. Competition delivers it in the long run, since entry pushes every firm to the bottom of its average total cost curve.
In practice
No cheaper way to grow the flats exists than the surviving farms' way.
Where people slip
Productive efficiency says the output is made cheaply, nothing yet about whether it is the right amount.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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