Question
Why is perfect competition the social-efficiency benchmark against which other structures are judged?
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Answer
It is both allocatively efficient (P=MC) and productively efficient (output at ATCmin).
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Question
In perfect competition, free entry and exit drive long-run economic profit to zero. At what price–cost identity does this occur, and why is it the breakeven anchor?
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Answer
At P=ATCmin; TR = TC so economic profit is zero.
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