Why is perfect competition efficient? | Homework.Study.com (2024)

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• Why in perfect competition, there are no economic profits or losses in the long-run?
• Why are perfectly competitive markets considered efficient? Be specific.
• Why would a perfect competitor never charge less than the market price?
• Why would a perfect competitor never charge more than the market price?
• Why is a perfectly competitive firm a price taker?
• Why is competition important for the efficient use of resources?
• What is the reason for continuing production in perfect competition even if they earn zero profit.
• Explain why in perfect competition, there are no economic profits or losses in the long run?
• Why is a long-run competitive equilibrium Pareto efficient?
• Why would you join a market that is almost perfectly competitive?
• Why do economists study perfect competition?
• Why is increasing return to scale incompatible with perfect competition?
• Why demand curve is horizontal in perfect competition?
• Why do perfectly competitive firms make zero economic profit in the long run?
• Explain why economic efficiency might not be achieved.
• Why in a perfectly competitive market, no firm realizes economic profits?
• Why is average revenue always equal to price? Why is this only correct in a perfectly competitive market?
• Why are marginal revenue and price equal for the perfectly competitive firm?
• Is a monopolist allocatively efficient? Why or why not?
• Why is producer surplus maximized under perfect price discrimination?
• Why are constant returns to scale incompatible with the perfect competition?
• Why do firms in a perfectly competitive industry make zero economic profit in the long run?
• Why isn't allocative efficiency where the price is equal to the average cost?
• Explain why monopolists do not achieve efficiency.
• Give the reason as to why we study the model of perfect competition. What does it enable us to see?
• Why do companies dislike pure competition? Explain.
• Why it is advantageous to society if we don't have monopolies?
• Why is comparative advantage important?
• Why do businesses compete in a free enterprise system?
• In the long run, why do perfectly competitive firms earn zero economic profit? Explain
• Explain why productive efficiency does not necessarily lead to allocative efficiency.
• Why is the marginal revenue equal to the average revenue under the perfectly competitive market?
• Why is profit maximization, by itself, an inappropriate goal?
• Why does marginal analysis lead to optimal or efficient quantities?
• Is a monopolist resource allocative efficient? Why or why not?
• Why do firms continue production in perfectly competitive markets if their profits are zero in the long run?
• Why won't a perfectly competitive firm earn economic profits in the long run?
• Why is allocative efficiency the point where marginal cost is equal to price?
• Why does a perfect competitor face a horizontal demand curve?
• At the free market equilibrium, why is the efficient level of output produced?
• Explain why the free-market system brings efficiency as well as freedom.
• Explain the reason for non-competitive price in an industry with a strong economies of scale.
• Why are public bureaucracies possibly less efficient than business firms?
• Why would redistribution result in "equity-efficiency tradeoff"?
• Why is the private sector more efficient than the public sector?
• Why do perfectly competitive (PC) firms earn zero economic profit in the long run?
• Explain why a public good is a market failure where the market will not provide the efficient amount of the good.
• Why are monopolies undesirable for an economy?
• Why is sustainable competitive advantage so important to a winning business strategy?
• Why is innovation so important for firms to compete in many industries?
• Why is profit not maximized when marginal benefit is lower than marginal cost?
• Is the used car market perfectly competitive? Why or why not?
• Why do markets typically lead to efficient outcomes despite the fact that sometimes they fail?
• Why is marginal cost and average cost the same in a perfectly competitive market?
• Why might firms in perfect competition choose to be open on Monday, typically the slowest day of the week, when their revenues do not seem to be sufficient to warrant doing so?
• Why is the demand curve horizontal in a perfectly competitive market?
• Why is free market capitalism so effective at allocating resources?
• Should the government intervene if a market is fully efficient? Why or why not?
• Why is gross profit a good measure of the effectiveness of engineers in a company?
• Explain why a perfectly competitive firm would or would not advertise.
• Explain why a perfectly competitive firm won't advertise.
• Why will the market economy not produce the efficient quantity of a good that is: a. non-excludable? b. non-rival in consumption?
• Assume at the current price, there is a surplus in a market. Explain why this market is currently not considered efficient.
• Explain the reason for fixing efficiency wage rate above the competitive level.
• Why is it that the private sector is not expected to supply an efficient amount of a pure public good?
• Why are fixed costs important, when maximizing profits?
• Why would complete and partial market failure cause market outcomes to be inefficient?
• Describe why market outcomes are not efficient when there is an externality.
• Why is economics the key to law firm profitability?
• Why does allocative efficiency occur where (demand) = (marginal cost)?
• Why is it unlikely that a private market would produce the socially optimal level of a public good? Can you give an example of a public good?
• Why do economies of scale often result in monopolistic or oligopolistic markets?
• Why did businesses consolidate into monopolies?
• Why is the demand curve horizontal in a perfectly competitive firm?
• Explain why the optimal point of production is where MR = MC.
• Why is free market economy efficient in resource allocation?
• Why is the economy a source of scarcity and effective choice?
• Why is the marginal revenue curve for a perfectly competitive firm the same as its demand curve?
• Why is the marginal revenue curve for a perfectly competitive firm is the same as its demand curve?
• Why would society be better off without a monopoly producing a good?
• Why are economic monopolies bad for societies?
• Why do markets sometimes fail to allocate resources efficiently?
• Why do we study the theory of perfect competition if no real-world market completely satisfies all of the theory's assumptions?
• What are the reasons of competitive firms earning zero profit in the long run?
• Explain why price Ceiling may be considered economically inefficient.
• Why is it in the best interest of the government to regulate natural monopolies?
• A firm maximizes its total revenue. Does it automatically maximize its profit too? Why or why not?
• Explain why gross profit is a good measure of the effectiveness of engineers in a company.
• Why are competitive markets important for continued economic progress?
• Explain why maximum output doesn't generate maximum profits.
• Explain why an externality generates inefficiency in a free market.
• Why does it make sense for a firm to seek to maximize total profit rather than to maximize marginal profit?
• Why is the perfectly competitive firm's demand curve horizontal?
• Explain why price floor may be considered economically inefficient?
• Why is there no economic profit for perfectly competitive firms in the long run? Why is there no economic loss?
• Why would a monopoly maximise revenue instead of profit?
• What are the reasons for fixing the efficiency wage rate above the competitive level?
• Give reasons why price discrimination improves the efficiency of market.
• Why is comparative advantage important for trade?
• Why should the optimal linear tax rate always be below the maximizing revenue tax rate?