Perfect competition is considered more efficient than monopoly because, in perfect competition: A) P = MC, while in monopoly P MC. C) they sell a homogeneous product. D) entry is prohibited.

Question

Perfect competition is considered more efficient than monopoly because, in perfect competition:
A) P = MC, while in monopoly P < MC.
B) P = MC, while in monopoly P > MC.
C) they sell a homogeneous product.
D) entry is prohibited.

Quizplus · Accepted Answer

In perfect competition, price (P) equals marginal cost (MC), leading to an efficient allocation of resources. In a monopoly, the price is set above marginal cost (P > MC), resulting in less efficient resource allocation and higher prices for consumers.

Perfect Competition Is Considered More Efficient Than Monopoly Because, in Perfect