The most socially efficient market structure in the long run is:

Question

Quizplus · Accepted Answer

Perfect competition leads to a socially efficient outcome in the long run because prices are driven down to their marginal costs and output is maximized. In perfect competition, there are many firms producing identical products and no firm has market power to influence prices. This leads to allocative efficiency where resources are allocated to the production of goods that society values the most. Additionally, productive efficiency is achieved where firms produce at minimum average total cost. Therefore, perfect competition is the most socially efficient market structure as it leads to consumer surplus, producer surplus, and allocative and productive efficiency.

The Most Socially Efficient Market Structure in the Long Run