Question

According to the key points, when is production considered efficient?

Options

• When output keeps increasing, whatever the cost

• When only labour cost is minimum

• When each factor’s extra contribution is equal to its cost

• When only land and capital are used

Answer 1

When each factor’s extra contribution is equal to its cost

Explanation:

Efficiency in production is achieved when the additional benefit from each factor of production matches the additional cost of using it.