ECON 102 Lecture Notes - Lecture 23: Allocative Efficiency, Perfect Competition, Oligopoly
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ECON 102 Full Course Notes
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Occurs when firm produces @ lowest possible atc. Only p. c. firms are productively efficient in l. r. , they are not in s. r. All firms in mono. comp. , digopolies and monopolies whether be in sr or lr are never productively efficient. Sr/lr firms in p. c markets are allocatively efficient. All firms in mono. comp. , oligopolies and monopolies are never allocatively efficient, both: sr/lr. If continued to produce not only would they lose their fc, but they would also loose additional $ with every unit produced. Max loss of a firm will accept = fc. If a firm shuts down they still have to pay fc. Ip = tr tc = (p atc)q. The more realistic versions of perfectly competitive market. Mono comp represents apprx 80% of all markets in the u. s. Characteristics: many buyers/sellers, similar, but different product (differentiated, no significant barriers. Mr = mc: many buyers/sellers, enough so that no single buyer/seller can impact the market all by themselves.
