Question
Under Perfect Competition
Answer: Option D
Answer: (d)
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product.
In the short run, perfectly competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC).
They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
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Answer: (d)
Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product.
In the short run, perfectly competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC).
They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).
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