Because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces an efficient allocation of economic resources.

Question

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In a purely competitive market, the equilibrium position, where supply equals demand, results in sellers setting prices equal to their marginal costs. This ensures that resources are allocated efficiently, as products are produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.

Because the Equilibrium Position of a Purely Competitive Seller Entails