0
Because in a perfectly competitive market, resources are used perfectly efficiently (excuse the grammar). A purely competitive market has very many peculiar features. One of them is that every firm is a price taker. This means they cannot set the price, so they must be as efficient as the most efficient competitor or they will be out-priced. This results in inefficient firms going out of business and only the most efficient staying alive.
What else can I help you with?
Does Indian Stock Market explain perfect competition?
no
Discuss whether economic efficiency as described in text books is likely to be able to be achieved in practice?
Economic efficiency is said to be achieved when both the conditions of productive and allocative efficiency are fulfilled. Productive efficiency arises when productin is carried out at lowest cost, i.e, at minimum average cost. On the other hand allocative efficiency arises when resources are allocated to teh production of those goods and services which consumers demand the most. This efficiency arises when price is equal to teh marginal cost of the good or service. Economic efficiency exists in the idealistic perfect market model of perfect competition. However this market structure barely exists. Imperfections exist in all markets. Moreover even if a market is eficient there may be a misallocation of resources which does not give rise to wellbeing of the economy. Hence economic efficiency does not necessarily lead to welfare economics.
How do the features of perfect competition and monopoly affect the outcomes of the market?
Economists use two sets of concepts to answer questions. First they apply efficiency concepts such as productive efficiency. Then they ask how perfect competition and monopoly affect the consumer.
Why is monopolistic competition inefficient compared to perfect competition?
Monopolistic competition is inefficient compared to perfect competition because firms in monopolistic competition have some degree of market power, allowing them to set prices higher than in perfect competition. This leads to higher prices for consumers and less efficient allocation of resources. Additionally, firms in monopolistic competition may engage in non-price competition, such as advertising, which can further reduce efficiency.
Explain in detail with suitable examples the imperfect competition and perfect competition?
In imperfect competition the producer is the price maker whereas in perfect the producer is the price taker. In imperfect no new competitors enter the industries hence super normal profits will continue to be realised, unlike in perfect comp
Does Indian Stock Market explain perfect competition?
no
Discuss whether economic efficiency as described in text books is likely to be able to be achieved in practice?
Economic efficiency is said to be achieved when both the conditions of productive and allocative efficiency are fulfilled. Productive efficiency arises when productin is carried out at lowest cost, i.e, at minimum average cost. On the other hand allocative efficiency arises when resources are allocated to teh production of those goods and services which consumers demand the most. This efficiency arises when price is equal to teh marginal cost of the good or service. Economic efficiency exists in the idealistic perfect market model of perfect competition. However this market structure barely exists. Imperfections exist in all markets. Moreover even if a market is eficient there may be a misallocation of resources which does not give rise to wellbeing of the economy. Hence economic efficiency does not necessarily lead to welfare economics.
How do the features of perfect competition and monopoly affect the outcomes of the market?
Economists use two sets of concepts to answer questions. First they apply efficiency concepts such as productive efficiency. Then they ask how perfect competition and monopoly affect the consumer.
Explain in what way a perfect competition model is a useful analytical tool in economics?
the perfect model
Why is monopolistic competition inefficient compared to perfect competition?
Monopolistic competition is inefficient compared to perfect competition because firms in monopolistic competition have some degree of market power, allowing them to set prices higher than in perfect competition. This leads to higher prices for consumers and less efficient allocation of resources. Additionally, firms in monopolistic competition may engage in non-price competition, such as advertising, which can further reduce efficiency.
Explain in detail with suitable examples the imperfect competition and perfect competition?
In imperfect competition the producer is the price maker whereas in perfect the producer is the price taker. In imperfect no new competitors enter the industries hence super normal profits will continue to be realised, unlike in perfect comp
Is IBM perfect competition?
IBM is a company, so it can't be a perfect competition. Only industries can be a perfect competition, or not.
Is bottled water considered a perfect competition?
Perfect competition to what. Please be specific.
Does perfect competition exist?
No, Perfect Competition is just an imaginary one and it does not exist at all.
What is the market structure with the most competition?
Perfect Competition
What is perfect competition and how does it function within the field of economics?
Perfect competition is a market structure where many buyers and sellers trade identical products, with no barriers to entry or exit. In this model, no single buyer or seller can influence the market price. It functions within economics by serving as a benchmark for analyzing other market structures and understanding how competition affects prices and efficiency.
What does the perfect competition graph look like in the long run?
In the long run, the perfect competition graph shows a horizontal demand curve and a downward-sloping supply curve intersecting at the equilibrium point, where price equals marginal cost. This results in maximum efficiency and zero economic profit for firms.
