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

monopolistic competition, and oligopoly, which are more frequently observed in the real world than perfect

competition, firms will not always produce at the minimum of average cost, nor will they always set price equal
to marginal cost. Thus, these other competitive situations will not produce productive and allocative efficiency.

Moreover, real-world markets include many issues that are assumed away in the model of perfect competition,

including pollution, inventions of new technology, poverty which may make some people unable to pay for

basic necessities of life, government programs like national defense or education, discrimination in labor

markets, and buyers and sellers who must deal with imperfect and unclear information. We explore these

issues in other chapters. However, the theoretical efficiency of perfect competition does provide a useful
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