Economics · Market Structures and Efficiency
Consider the following statements about allocative and productive efficiency across market structures: I. Perfect competition is both allocatively and productively efficient in long-run equilibrium. II. Monopoly can be productively efficient if it happens to produce at minimum LRAC. III. Monopolistic competition is productively inefficient (excess capacity) but may be allocatively efficient in the long run. IV. A perfectly price-discriminating (first-degree) monopolist achieves allocative efficiency but is productively inefficient. Identify the INCORRECT statement(s):
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1II only
- 2III only
- 3I and II only
- 4III and IV only✓
Correct answer
III and IV only
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