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Assuming that the market for cigarettes is in perfect competition, what does the allocative and productive efficiency imply in this case? What does it not imply? 

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Insha Fatima
Insha FatimaLv10
19 Nov 2020

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Related questions

After learning about both the perfect competition model and more about real-world markets, which of these statements rings true?

a) Both real-world markets and the perfect competition model constantly obtain productive and allocative efficiencies

b) Real-world markets consistently produce at the minimum of average cost and equal to marginal cost, and the perfect competition model portrays and extremely of real-world markets

c) Real-world market firms are inconsistent with attaining productive or allocative efficiency while the perfect competition model, in the long run, is mostly a hypothetical benchmark

Perfect competition is the one industry structure that achieves all of the following:

- productive efficiency

- allocative efficiency

- maximizes social welfare

Select one of the achievements of the perfect competition listed above. Describe what it means in your own words, and state why you believe it to be the most important standard.

Does the market system result in allocative​ efficiency? In the long​ run, perfect competition

A. results in allocative efficiency because firms produce where price equals marginal cost.

B. does not result in allocative efficiency because firms enter and exit until they break even where price equals minimum average cost.

C. results in allocative efficiency because firms produce where the marginal benefit consumers receive from consuming the last unit of the good sold is greater than marginal cost.

D. does not result in allocative efficiency because price does not equal the marginal benefit consumers receive from consuming the last unit of the good sold.

E. does not result in allocative efficiency because firms produce an identical product that offers consumers no variety.

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