A firm producing standardized organic wheat operates in a perfectly competitive market. Its short-run total cost (TCTCTC, in £) is given by the function:
TC=2q2+8q+32 TC = 2q^2 + 8q + 32 TC=2q2+8q+32where q q\,q represents the quantity of wheat produced (in tonnes).
The firm's long-run equilibrium position is illustrated in the diagram below:
At what price (PPP) and quantity (qqq) does this individual firm achieve both productive and allocative efficiency simultaneously in its long-run equilibrium?
P=£24P = £24P=£24, q=4q = 4q=4
P=£16P = £16P=£16, q=2q = 2q=2
P=£40P = £40P=£40, q=8q = 8q=8
P=£72P = £72P=£72, q=16q = 16q=16
