Purchase Solution

Perfect competitiveness

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution

Solution Summary

Perfect competitiveness

Solution Preview

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 ...

Purchase this Solution


Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.