Both the Perfectly Competitive Firm and the Monopolistically Competitive Firm

question 127

Essay

Both the perfectly competitive firm and the monopolistically competitive firm produce at the output where marginal revenue equals marginal cost (MR = MC)but only the perfectly competitive firm achieves allocative efficiency.Explain why this is the case.

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Definitions:

Human Nature

The intrinsic characteristics, behaviors, and motivations that are considered inherent in all human beings.

Unconscious

A part of the mind that contains thoughts, memories, and desires not directly accessible to awareness but that can influence behavior.

Neurotic Disturbance

Describes psychological issues characterized by anxiety, depression, or other forms of emotional distress, not arising from psychosis.

Dreams

A series of thoughts, images, and sensations occurring in a person's mind during sleep, often interpreted for psychological significance.