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

Q: Use a graph to demonstrate the circumstances that would prevail in a perfectly competitive market…

A: A perfectly competitive firm is price taker. The market price it faces is constant. This implies…

Q: what is difference between perfect and pure competition? Highlight the assumptions of perfect…

A: Pure Competition is a subpart of perfect competition Pure competition is a market situation where…

Q: Discuss the economic conditions that are necessary to achieve productive and allocative efficiency…

A: Productive efficiency: The productive efficiency exists at a level where per unit cost of producing…

Q: What is the Imperfect competition that refers to any form of market structure other than perfect…

A: Perfect competition refers to a market in which there is many seller and buyer dealing in a…

Q: Farmer Smith grows wheat. The average total cost and marginal cost of growing wheat for an…

A: Competitive market refers to the market structure where there are many buyer and many sellers, thus…

Q: What type of economic profit can most firms expect to make in the long run? Explain your answer.

A: A market is a place where buying and selling of goods and services takes place.

Q: What are the assumptions of perfect competition?  What are the prospects for profitability in the…

A: The perfect competition is a theoretical market structure, which follows some assumptions. In this…

Q: Strictly speaking, pure competition has never existed and probably never will. Then why study it?

A: ANS Pure competition is the form of market where there are many sellers & many buyers and the…

Q: Based on the given graph: a. If this firm profit-maximizes, how much output will it produce and…

A: Given;

Q: Why do economists believe that economic profit is the more accurate measure of a business success?…

A: Accounting profit only considers the cost that has actually happened, but economic profit considers…

Q: Do entry and exit occur in the short run, the long run, both, or neither?

A: In the short run, the firms have one or more fixed factors of production. The firms cannot change…

Q: What two lines determine whether a firm is making positive or negative or zero profits?

A: Introduction The perfect competitive firm only needs to decide on one thing: how much to make. To…

Q: The basic model of pure competition reviewed in this chapter finds that in the long run all firms in…

A: The pure competition indicates that the market is perfectly competitive. The main features of the…

Q: What are three short-run outcomes in the perfect competition? When a firm takes the short-down…

A: A perfect competition is a market structure in which many vendors and buyers are present. In this…

Q: What are three short-run outcomes in the perfect competition?

A: In the short-run, the perfect competitive firms, can have three outcomes.

Q: When is allocative efficiency met in a perfectly competitive market? when price equals average cost…

A: When talking about allocative efficiency, it is the market situation when a market is producing a…

Q: Why perfect competition considered as a price taker?

A: According to economic theory, perfect competition exists when all companies sell the same things,…

Q: based on four market structure in economics, why some firms able to continue to make an economic…

A: Meaning of Market: The term market refers to the situation under which the producers or the…

Q: You observed that in the long run, a profit-maximizing firm chose to exit a market. What can you…

A: There is a difference between the cost function in the short-run and in the long-run due to which…

Q: why do economists and policy makers use perfect competition as a benchmark to analyze market…

A: Perfectly competitive market: - it is a market condition where there are many buyers and many…

Q: What are the advantages of pure competition?

A: Answer: A purely competitive business is the most efficient type of operation. This is due to the…

Q: Why is Perfect Competition an ideal market structure? Please explain

A: In a market, a perfect competition is considered as an ideal market when there is other markets like…

Q: Why does perfect competitive market need to be maintained?

A: In an economy, a perfectly competitive market is the place where anyone is allowed to enter or exit…

Q: What are the conditions that distinguish perfect competition from other market structures?

A: In case of Perfect Competition there are large number of buyers and sellers selling identical…

Q: Why economic profit is negat

A: Profit: It refers to the revenue earned by the companies. With more profit earned by the companies,…

Q: How does perfect competition lead to allocative and productive efficiency? Perfect competition leads…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Using the model of perfect competition, explain what it means to say, “Too much electricity is…

A: Perfect competition refers to the situation where there are many buyers and sellers exist in the…

Q: How equilibrium price is determined under perfect competition?

A: Under perfect competition, both producers and consumers are price takers.

Q: When is it the right time when a firm will enter a competitive market?

A: A competitive market is considered as one where firms have no opportunity to deviate from market…

Q: What does that mean in terms of long-run profit?

A: Perfectly Competitive Market is the market in which buyers and sellers are large in numbers and they…

Q: Why are abnormal profits of a firm difficult to sustain?

A: The abnormal profits under perfectly competitive market are difficult to sustain because of the free…

Q: Why a competitive firm is price taker? Explain graphically why perfect competition is preferable to…

A: When the following conditions exist, firms are said to be in perfect competition: (1) many firms…

Q: explains why in perfect competition, there are no economic profits or losses in the long run?

A: A market is a place where the buyers and sellers interacts with each other and decides to exchange…

Q: You read in a business magazine that farmers are reaping high profits. With the theory of perfect…

A: Perfect competition is many sellers dealing in commodity which is same in quality and price at which…

Q: How can cigarettes in perfect competition be productive and allocative efficiency?

A: Productive efficiency means that the economy is producing without any wastage. The choice of…

Q: Strictly speaking, pure competition is relatively rare. Then why study it?

A: Pure competition is a business condition where similar goods are sold by a wide number of individual…

Q: how is the short run different from the long run in terms of economic profit in : - perfect…

A: Economic profit is defined to be the difference between the revenue generated from the sale of the…

Q: Describe a perfectly competitive market structure and its characteristics?

A: Perfectly competitive market structure is the market structure in which,there is no or negligible…

Productive and Allocative Efficiency Analysis

Productive efficiency, also referred to as production efficiency is a term in economics describing the level at which a company is operating at its maximum capacity. Beyond this point, the entity will be unable to manufacture any additional goods without cutting down another product’s production level. This occurrence is an outcome of production happening alongside a Production Possibility Frontier (PPF).