ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Economic efficiency – competition will ensure that firms move towards productive efficiency. The threat of competition should lead to a faster rate of technological diffusion, as firms have to be responsive to the changing needs of consumers. This is known as dynamic efficiency.

Detailed explanation-2: -Competition among buyers increases prices and allocates goods and services to those people who are willing and able to pay the most for them. Competition among sellers results in lower costs and prices, higher product quality, and better customer service.

Detailed explanation-3: -More competition means greater choice and more services Because they can access a wider range of products and services, consumers – and also businesses, as consumers of raw materials – can find the product that best meets their needs.

Detailed explanation-4: -Productive efficiency means producing without waste so that the choice is on the production possibility frontier. In the long run in a perfectly competitive market-because of the process of entry and exit-the price in the market is equal to the minimum of the long-run average cost curve.