The correct answer is: B. MC = AC
When marginal cost equals average cost, the firm is producing at the minimum point of the average cost curve and so there will be productive efficiency.
Marginal cost (MC) is the additional cost incurred by producing one more unit of output. Average cost (AC) is the total cost of production divided by the number of units produced.
When MC equals AC, the firm is producing at the point where the additional cost of producing one more unit of output is equal to the average cost of producing all units of output. This is the point where the firm is producing at the lowest possible cost per unit of output.
Productive efficiency is the condition in which a firm is producing the maximum output possible with the given level of inputs. This occurs when the firm is producing at the minimum point of the average cost curve.
The other options are incorrect because they do not necessarily indicate that the firm is producing at the minimum point of the average cost curve.
Option A: AC = AR. This condition indicates that the firm is earning a normal profit. It does not necessarily mean that the firm is producing at the minimum point of the average cost curve.
Option C: MC = MR. This condition indicates that the firm is maximizing profits. It does not necessarily mean that the firm is producing at the minimum point of the average cost curve.
Option D: AR = MR. This condition indicates that the firm is in a perfectly competitive market. It does not necessarily mean that the firm is producing at the minimum point of the average cost curve.