Perfect competition is efficient because all the following ...

[wrbasek0]

Perfect competition is efficient because all the following conditions hold except ________.
 
  A. total product is maximized
  B. firms maximize profit and produce on their supply curves
  C. consumers get a real bargain and pay a price below the value of the good
  D. firms minimize their average total cost of producing the good

Question 2

What is deadweight loss and under what conditions does it occur?
 
  What will be an ideal response?

[honnalora]

Answer to Question 1

A Although perfectly competitive firms produce at the minimum average total cost, that result does not mean that the firm's total product is at its maximum. Each firm could produce more, albeit at a higher average total cost.

Answer to Question 2

The deadweight loss is the decrease in total surplus that results from an inefficient level of production. This is the decrease in consumer surplus plus the decrease in producer surplus that occurs when the market either overproduces or underproduces relative to the efficient quantity.

[wrbasek0]

Excellent

[Sarahjh]

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