An imperfectly competitive industry is often allocatively inefficient when compared to the performance of a competitive industry, because imperfect competitors

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Imperfect competitors set price above the marginal cost, which results in a higher price for consumers and a lower quantity produced than would occur in a perfectly competitive industry. This leads to allocative inefficiency, as resources are not being allocated to their most valuable use. The other options are not necessarily factors that contribute to allocative inefficiency.

An Imperfectly Competitive Industry Is Often Allocatively Inefficient When Compared