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Answer to Question #77199 in Microeconomics for Syed
Question #77199
What market structure is used to benchmark allocative efficiency and why do we use it? Illustrate and explain using a diagram
Expert's answer
Perfect competition is used to benchmark allocative efficiency, because it shows a perfect market with uncountable number of firms, which are price-takers, no barriers to entry and the most efficient allocation of resources with no deadweight loss.
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