Will a perfectly competitive market display allocative efficiency? Why or why not?

Q: what is difference between perfect and pure competition? Highlight the assumptions of perfect…

A: Pure Competition is a subpart of perfect competition Pure competition is a market situation where…

Q: What is the meaning of ‘acceptable loss’ for a perfectly competitive firm ? Draw a graph and…

A: In a perfectly competitive market, there will be a large number of sellers, which means that a…

Q: Explain how the long-run equilibrium in a perfectly competitive industry achieves 'allocative…

A: When profit-maximizing companies in perfectly competitive markets combine with utility-maximizing…

Q: If firms in a competitive industry incur an economic profit, what happens to supply, price, output,…

A: Economic profit is defined as difference between revenue that is received from the sale of a good or…

Q: How does a competitive firm determine the quantity that maximizes profit?

A: The markets are considered to be of utmost importance for the economies, because it assists in the…

Q: Why are perfectly competitive markets considered economically efficient?

A: There are several forms of the market that exists in the real world out of which perfect competition…

Q: Do entry and exit occur in the short run, the long run, both, or neither?

A: In the short run, the firms have one or more fixed factors of production. The firms cannot change…

Q: Farmer Jones grown sugar. The total revenue, marginal revenue, total cost, and marginal cost of…

A: Answer: (1). Maximum profit for a perfectly competitive firm occurs where the marginal revenue is…

Q: When does Concave profit curves occur? Explain with an example?

A: Iso quant curve refers to the curve which shows all the combination of inputs which are capable of…

Q: What are the characteristics of a perfectively competitive market?

A: There are different market structures with different characteristics.

Q: What are three short-run outcomes in the perfect competition? When a firm takes the short-down…

A: A perfect competition is a market structure in which many vendors and buyers are present. In this…

Q: In the long-run, a perfectly competitive firm will earn what kind of economic profit?

A: In the long run, a perfectly competitive firm will earn normal/zero economic profit.

Q: Why do a firm's profit disappear in the long run?

A: The firms operating in the long run, have to adjust and abide by the time frame which would allow…

Q: If new technology in a perfectly competitive market brings about a substantial reduction in costs of…

A: The term "perfect competition" refers to a fictional market structure in which all suppliers are…

Q: When is allocative efficiency met in a perfectly competitive market? when price equals average cost…

A: When talking about allocative efficiency, it is the market situation when a market is producing a…

Q: Why perfect competition considered as a price taker?

A: According to economic theory, perfect competition exists when all companies sell the same things,…

Q: When will a firm neither enter or exit a competitive market?

A: In competitive market firms are free to enter and exit.

Q: Explain how economics make profit or loss when firms are perfectly competitive.

A: In a competitive market there are large number of firms producing similar and identical products…

Q: What are the advantages of pure competition?

A: Answer: A purely competitive business is the most efficient type of operation. This is due to the…

Q: Fabulous Farms operates in a perfectly competitive market. Which of the following is required for…

A: In a perfect competition market there is large number of buyer and sellers of good, also in…

Q: What are the Characteristics of a Purely Competitive Market?

A: Characteristics of a Purely Competitive Market:   The Purely competitive market is the market…

Q: Is the perfectly competitive market model realistic? If not, why do we want to study the perfectly…

A: Perfect competition is a market model that assumes a large number of firms produce identical goods…

Q: Explain why a competitive firm’s marginal cost curve is the same as its supply curve.

A: In perfectly competitive market there are many sellers as well as buyers. Price is given that means…

Q: Describe how firms in Perfect Competition achieve both allocative and productive efficiency and thei…

A: There are two situations that arise in a perfectly competitive market, one is short-run equilibrium…

Q: What are the conditions that distinguish perfect competition from other market structures?

A: In case of Perfect Competition there are large number of buyers and sellers selling identical…

Q: Why is a firm in a perfectly competitive market called a price taker? How does a firm in perfect…

A: Price taker: It means a person or company accepting the prevailing prices in the market and unable…

Q: If a firm makes zero economic profit, it will exit the market in the long run. Do you agree?…

A: No economic profit is also referred as normal profit. Economic profit is calculated by subtracting…

Q: How does perfect competition lead to allocative and productive efficiency? Perfect competition leads…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: How equilibrium price is determined under perfect competition?

A: Under perfect competition, both producers and consumers are price takers.

Q: Explain whether a perfectly competitive market is more efficient for buyers to buy or sellers to…

A: When perfectly competitive markets combine with utility-maximizing buyers, the resulting quantity of…

Q: Why are abnormal profits of a firm difficult to sustain?

A: The abnormal profits under perfectly competitive market are difficult to sustain because of the free…

Q: What are the requirements for a perfect competition market?

A: Competitive market: - it is a market condition where there are many buyers and many sellers in the…

Q: Economics Explain (in detail with example) three assumptions for the perfectly competitive market.

A: Perfect competition is a type of market structure in which there are large number of buyers and…

Q: What is the meaning of ''acceptable loss'' for a perfectly competitive firm? Draw a graph and…

A: Acceptable loss means the loss which has to be accepted.This happens generally in perfectly…

Q: Explain why a company would shut down in the short run.

A: The shut down point is the point at which a firm decides to seize its operations in the short run…

Q: In a perfectly competitive market ,why does the firm always break even in the long run ? Illustrate…

A: In perfect competition, in the very short run firms experience profits. However, new firms enter…

Q: A single firm in a perfectly competitive market is relatively small compared to the rest of the…

A: In the ‘perfect competition(PC)’ all firms sell ‘identical products’ that are homogeneous. Here all…

Q: What is the shape of the demand curve faced by the perfectly competitive firm? Explain your answer…

A: Perfect competition is the type of market structure in which there are many buyers and sellers of a…

Q: Explain how the profit-maximizing rule of setting P = MC leads a perfectly competitive market to be…

A: In a perfectly competitive market, there are large number of buyers and sellers in the market…

Q: Does a competitive firm’s price equal its marginal cost in the short run?

A: A competitive firm is one that produces and sells output in the market with many sellers who offers…

Q: The market for which product best fits the definitionof a perfectly competitive market?a. eggsb. tap…

A: A market is the collection of buyers and sellers. It is the system in which buyers and sellers…

Q: Assuming that the market for cigarettes is in perfect competition, what do allocative and productive…

A: In a perfectly competitive market, when both the profit-maximizing firms and the utility-maximizing…

Q: What are the characteristics needed for a perfectly competitive market?

A: In a perfect competitive market, there is a number of buyers and sellers, selling similar products.…

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).