ABSTRACT
A nightmare for a locally owned variety store is for a Wal-Mart to open up next door. Any business would generally suffer a loss in profits if competition from another business was keen. Competition that results in a perfectly competitive market only exists in economists’ dreams. Perfect competition is a theoretical extreme; in reality, some markets may approach it, but none ever really obtain it. Even so, as discussed in Chapter 10, economists use the perfectly competitive market model to evaluate the efficiency of actual markets. With perfect competition as the standard, applied economists measure how actual markets and economies with missing markets allocate resources.Basedon this comparison, applied economists developpolicies andprograms to improve resource allocation efficiency.
