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© 2009 Pearson Education, Inc. Publishing as Prentice Hall   Principles of Economics 9e by Case, Fair and Oster

Allocative Efficiency and Competitive Equilibrium

Producing What People Want:  The Efficient Mix of Output

The condition that ensures that the right things are produced is P = MC.

Society will produce the efficient mix of output if all firms equate price and marginal cost.

 FIGURE 12.3  The Key Efficiency Condition: Price Equals Marginal Cost

The Efficiency of Perfect Competition

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