It is possible for perfectly competitive markets to be inefficient when externalities are present.
Externalities arise when an economic activity has an unintended impact on other economic agents and/or the market. This results in there being a socially optimal level of production that does not coincide with the privately determined equilibirum level of production derived from the supply and demand curves (which, respectively, represent the marginal private costs and marginal private benefits to producers and consumers).
With respect to the efficiency of markets, positive externalities result in too little of the good in question being produced. In this case, the market equilibrium is lower than desired (the marginal social benefit curve lies above the marginal private benefit [demand] curve). In this case, the efficient market outcome would occur where the marginal social beneift curve interests the marginal private cost (supply) curve.
When negative externalities occur, too much of the good in question is being produced. This results in the supply curve, which represents the marginal private costs of production, lying below the marginal social cost curve because the private cost curve fails to take into account the costs of production incurred by all of society. In this case, the efficient market outcome would occur where the marginal social cost curve coincides with the private marginal benefit (demand) curve.
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
In perfect copmetative marker there is no influence of price...
A perfectly competitive market has many competitors. There is no one competitor that has more say in product prices within the industry.
No. There is no perfectly competitive market in real life.
No. There is no such thing as a perfectly competitive market, as it is only used as a model in economics.
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
In perfect copmetative marker there is no influence of price...
Sperm in the market flow
A perfectly competitive market has many competitors. There is no one competitor that has more say in product prices within the industry.
B. Perfectly elastic This is because it is operating in a perfect competitive market
No. There is no perfectly competitive market in real life.
No. There is no such thing as a perfectly competitive market, as it is only used as a model in economics.
assumption being made: competitive market as perfect competition.Many buyers and sellersHomogeneous product (one good is not distinguishable from all the others)Perfect knowledge about the marketNo barriers of entryPerfect factor mobility
no but from women it is
Competitive Intensity
barriers keep companies from entering the market freely
Perfectly competitive