when efficiency is disrupted in pure competition producers will reallocate resources until product supply is such that price will again _ marginal cost

Question

Ryker David

Business

7 February, 10:55

when efficiency is disrupted in pure competition producers will reallocate resources until product supply is such that price will again _ marginal cost

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Marcel Mclean · Answer 1

When efficiency is disrupted in pure competition producers will reallocate resources until product supply is such that price will again equal marginal cost.

Explanation:

Marginal cost refers to the cost that is incurred due to the production of additional one unit of any goods or services. It includes all the cost in the production of the extra one unit of the product or services. For instance consider an organisation is planning to build a new machine fore the product of a product and the cost associated with building the new plant will be the marginal cost.

Pure competition market is also called as perfect market. Here there will be a large number of sellers who are the competitors selling a same product. In such a market when the efficiency gets disrupted, then the producers can involve in the reallocation of resources until product supply is such that price will again equal marginal cost.