<P> Perfect competition provides both allocative efficiency and productive efficiency: </P> <Ul> <Li> Such markets are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC = MR). In perfect competition, any profit - maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that a factor's price equals the factor's marginal revenue product . It allows for derivation of the supply curve on which the neoclassical approach is based . This is also the reason why "a monopoly does not have a supply curve". The abandonment of price taking creates considerable difficulties for the demonstration of a general equilibrium except under other, very specific conditions such as that of monopolistic competition . </Li> <Li> In the short - run, perfectly competitive markets are not necessarily productively efficient as output will not always occur where marginal cost is equal to average cost (MC = AC). However, in long - run, productive efficiency occurs as new firms enter the industry . Competition reduces price and cost to the minimum of the long run average costs . At this point, price equals both the marginal cost and the average total cost for each good (P = MC = AC). </Li> </Ul> <Li> Such markets are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC = MR). In perfect competition, any profit - maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that a factor's price equals the factor's marginal revenue product . It allows for derivation of the supply curve on which the neoclassical approach is based . This is also the reason why "a monopoly does not have a supply curve". The abandonment of price taking creates considerable difficulties for the demonstration of a general equilibrium except under other, very specific conditions such as that of monopolistic competition . </Li> <Li> In the short - run, perfectly competitive markets are not necessarily productively efficient as output will not always occur where marginal cost is equal to average cost (MC = AC). However, in long - run, productive efficiency occurs as new firms enter the industry . Competition reduces price and cost to the minimum of the long run average costs . At this point, price equals both the marginal cost and the average total cost for each good (P = MC = AC). </Li>

In perfect​ competition p​ = mc is the condition that