Perfect Competition (Edexcel A-Level Economics A): Flashcards

Allocative and productive efficiency

Firm that must accept market price; cannot influence it

$AR = MR = P$ (all equal)

$MR = MC$ (marginal revenue = marginal cost)

Identical products; no brand loyalty or differentiation

Normal profits only

$P = \text{minimum } LAC$

$P = MC$

Not achieved; no funds for R&D/innovation

Horizontal at minimum $LAC$