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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can PC Markets lead to Allocative Efficiency?

Author: eric_galvao



Answer:

-In PC Markets, Demand = Marginal Utility because as Quantity Increases, its Worth to Consumers falls. -PC Markets also have Supply = MC because Law of Diminishing Returns -Allocative Efficiency happens when the Price is = to What Consumers would Pay for, so, Producers will Supply up to that amount. So P=MU=MC


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