Question

What is meant by a purely competitive firm? Can you provide examples of firms that are economically efficient as opposed to firms that are economically inefficient? Do firms take into consideration the availability of the scarce resource in the production of intermediate and/or final goods? Please provide real-life examples in your response.

Answer 1

Competitive market firm refers to a situation where firm using better utilization of the scarce economic resources in the production process.

The perfect market is considered as a competitive firm because in long run firm is producing the output level where MC equal to MR at minimum point and price is equal to Price.

And it is an efficient market because consumers are benefited Price is equal to MC economic resource of the economy optimally utilized.

Another hand Imperfect market Monopoly, Monopolistic market Price is greater than the MC and the production level is not optimally produced and hence miss-allocation of the resources is exited.