A perfectly competitive market usually achieves economic efficiency because

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are no barriers to entry and all goods are perfect substitutes, meaning consumers have access to identical products from multiple sellers. This leads to price competition among firms, resulting in an efficient allocation of resources and consumer surplus. Additionally, each firm in the market is a price taker, meaning they have no market power to influence prices and must accept the market price. This results in firms producing at the lowest possible cost, leading to productive efficiency. Therefore, a perfectly competitive market achieves economic efficiency due to the absence of barriers to entry, product homogeneity, and price competition.

A Perfectly Competitive Market Usually Achieves Economic Efficiency Because