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Managerial Economics by Donald N. Stengel

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Why Perfect Competition Is Desirable

In a simple market under perfect competition, equilibrium occurs at a quantity and price where the marginal cost of attracting one more unit from one supplier is equal to the highest price that will attract the purchase of one more unit from a buyer. At the price charged at equilibrium, some buyers are getting a bargain of sorts because they would have been willing to purchase at least some units even if the price had been somewhat higher. The fact that market demand curves are downward sloping rather than perfectly flat reflects willingness of customers to make purchases at higher prices.

At least in theory, we could imagine taking all the units that would be purchased at the equilibrium price and using the ...

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