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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

Perfect Competition Versus Real Markets

We have built a model of a perfectly competitive market system that produces an efficient allocation of resources, an efficient mix of output, and an efficient distribution of output.  The perfectly competitive model is built on a set of assumptions, all of which must hold for our conclusions to be fully valid.

These assumptions do not always hold in real-world markets.

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