Concept explainers
The difference between
Explanation of Solution
Both the productive and allocative efficiencies can only be seen in the perfectly competitive market, where the industry’s demand curve is horizontal. In a horizontal demand curve, price is equal to marginal cost is equal to marginal revenue is equal to average cost is equal to average revenue
Perfectly competitive market: A perfectly competitive market is a market structure where there are many buyers and sellers, and there are identical products in the market.
Monopoly: Monopoly refers to a market structure with the features of a single seller and more buyers. The firms have full control over the market.
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