Why do economists consider perfect competition to be the most efficient market structure?
What will be an ideal response?
Perfect competition is the most efficient market structure because, in the long run, each firm in the market will be producing at its minimum average cost, or per-unit cost (see Figure 10-9a in the text, for example). This means that consumers get desired goods and services at the lowest possible prices, and also that the firms are economizing on society's scarce resources to the greatest extent possible.
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What type of market runs most efficiently when one large firm supplies all of the output?
a. a natural monopoly b. a network c. perfect competition d. imperfect competition
If the aggregate supply curve shifts outward, then unemployment
a. and inflation will both decrease. b. and inflation will both increase. c. will increase and inflation will decrease. d. will decrease and inflation will increase.