Perfectly competitive markets are efficient in the long run because

Question

Quizplus · Accepted Answer

In perfectly competitive markets, efficiency in the long run is achieved because the price (P) equals marginal revenue (MR), which equals marginal cost (MC), and both short-run average total cost (SRATC) and long-run average total cost (LRATC) are minimized. This condition ensures that resources are allocated in the most efficient way, with firms producing at the lowest possible cost and prices reflecting the true cost of production.

Perfectly Competitive Markets Are Efficient in the Long Run Because