assure that the benefits to consumers of what they are buying, as measured by the price they are willing to pay,

is equal to the costs to society of producing the marginal units, as measured by the marginal costs the firm

must pay—and thus that allocative efficiency holds.

We should view the statements that a perfectly competitive market in the long run will feature both productive

and allocative efficiency with a degree of skepticism about its truth. Remember, economists are using the

concept of “efficiency” in a particular and specific sense, not as a synonym for “desirable in every way.” For

one thing, consumers’ ability to pay reflects the income distribution in a particular society. For example, a

person with a low income may not be able to purchase their own car because they have insufficient income.

Perfect competition, in the long run, is a hypothetical benchmark. For market structures such as monopoly,
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