A perfectly competitive market allocates resources efficiently when all social costs and benefits are internalized by those engaged in the market in the form of marginal private benefit and marginal private cost.

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In a perfectly competitive market, when all social costs and benefits are internalized, the marginal private cost equals the marginal social cost, and the marginal private benefit equals the marginal social benefit, leading to efficient resource allocation.

A Perfectly Competitive Market Allocates Resources Efficiently When All Social