Question

Describe "producing at a technically efficient level"

Answer 1

Efficiency has two forms: Allocative and productive (technical) efficiency. Allocative efficiency entails pricing at marginal cost.

Technically efficient production occurs when the output level corresponds to the minimum average total cost (ATC). In such case, production takes place at lowest point of ATC curve. In long-run perfectly competitive equilibrium, price equals Marginal cost (MC), which equals ATC. Since MC and ATC intersect at minimum point of ATC, technically efficient production occurs at this point.