Question

even though firms in competitive price-searcher markets do not produce at minimum atc, competitive price-searcher markets may still be consistent with economic efficiency because

Answer 1

Firms are known to be free to set price and also to face strong competitive pressure. Competitive price-searcher markets may still be consistent with economic efficiency because they provide consumers with a greater diversity of products.

• Firms in competitive price-searcher markets that has a small entry obstacles often face a downward sloping demand curve.  Competition often exists from existing firms and new rivals.

Firms that exist in a perfectly competitive market are known to be price takers due to the fact that once the market determines an equilibrium price for the product, firms need to accept the stated price.

For an individual to sell a product in a perfectly competitive market, one must  just be happy with the price.

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