Why is perfect competition taken as a benchmark for economic efficiency?
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Heya...
Perfect competition is that form of market in which there are large number of buyers and sellers and the product of each seller Is homogeneous and also there is no price control of a producer because prices are fixed by market forces supply and demand...
Now your question... why it is taken as benchmark of economic efficiency.....
So answer is....
* As it's product are homogeneous so there is a mobility of labours they can shift anywhere in perfect competition and use their efficiency it will not take time to set up...
* No any other selling cost because all are same so that extra cost is used in other economic activities....
Perfect competition is that form of market in which there are large number of buyers and sellers and the product of each seller Is homogeneous and also there is no price control of a producer because prices are fixed by market forces supply and demand...
Now your question... why it is taken as benchmark of economic efficiency.....
So answer is....
* As it's product are homogeneous so there is a mobility of labours they can shift anywhere in perfect competition and use their efficiency it will not take time to set up...
* No any other selling cost because all are same so that extra cost is used in other economic activities....
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