Answer
When P is at the lowest point of the ATC, this means that productive efficiency is met.
When P=MC, this would mean that allocation efficiency is met.
Work Step by Step
Productive efficiency is met when a firm uses the least cost method of production to produce their goods. This is met when P is at the lowest point of the ATC as the lowest point of the ATC represents the least cost method that a firm can use to produce, and a firm producing at that point would mean that it has achieved production efficiency.
Allocation efficiency is met when a firm produces the particular combination of good that consumers most desire. Price reflects the amount of resources that the market has determined to be desired, through the market forces of demand and supply, and also reflects the benefit that an additional good would have on the consumer. The MC reflects the cost that producing an additional unit of good has on society, and thus when P=MC, the benefit to both the producer and consumer is equal for the production of the additional good, which would mean that the combination of goods that consumers most desire would be produced, as there is an incentive for the firms to do so .
