Economics - Perfectly Competitive Markets - HW Help?

Question

Explain why the economy reaches an economically efficient outcome if all input and output markets are perfectly competitive. (Hint: You might want to think about how each of the 4 assumptions about perfect competition lead us to economic efficiency).

Answer 1

The  economic efficiency question fails due to mixed market that includes regulators who contribute nothing to production. The question becomes an academic issue in the modern economic systems.  There is no existing model of a pure capitalist economy.  Competition is  premised on the principle of greed for scare goods.  It is a correct statement of the human condition and validates the academic soundness of capitalism.  But, there is no perfectly competitive market.  Unless, it would be in a black market micro-economic model.  Assuming the government does not have knowledge of the underground activity which assumes there is no regulatory costs, i.e., bribes to officials.