Principles of Microeconomics / Unit 17 MIC 1626 short lesson, about 20 seconds
Efficiency in Competition
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The idea
Long-run competition is productively efficient, at minimum average cost, and allocatively efficient, at price equal to marginal cost: the last unit is worth what it cost society. Every other structure is measured against it.
In practice
Below the efficient quantity a unit worth more than its cost goes unmade.
Where people slip
Efficient is not fair, and it assumes no externality.
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