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    Perfect competitiveness

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    Why is a perfect competitive firm associated with effeciency for both consumers and business?

    © BrainMass Inc. brainmass.com October 10, 2019, 4:34 am ad1c9bdddf

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    Before we explain why perfect competition (pc) is efficient, we should know what efficiency is.

    If a good costs $5 to make, and the value of this good is $10 to the society (for example, say one person is willing to pay $10 for it, in other words, this person thinks that the value of the good is $10 to him) as a whole (society means all consumers and producers together), then the producer should produce this good. If the produce does not produce, it is considered inefficient for the buyer (marginal benefit of producing > marginal cost of ...

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    Perfect competitiveness