Competition leads to more efficient use of resourcesThe word "efficiency", in the dictionary of economists, is often interpreted as the degree to which an economy allocates scarce resources to meet the needs and desires of consumers. As we can see, a free market economy is one in which resources are allocated based on the principle of self-interest. Where there are profits, there are businesses, and where there are businesses producing identical goods and services, there is inevitably competition. The degree of competition determines the market structure which is the main determinant of business behavior or conduct. This in turn determines the efficiency of the use of scarce resources. It is often argued that competition leads to more efficient use of resources. I agree with the statement, but not completely. In my opinion, competition would lead to efficiency and better use of resources by encouraging companies to improve productivity, reduce prices and innovate, but in certain industries, particularly those where the impact of cost savings he scale is distinctive, for example industries with high indivisibilities, monopoly is more favorable. Economic efficiency can be seen as maximizing total utility from a given quantity of scarce resources. There are two types of economic efficiency: allocative efficiency and productive efficiency. According to their definitions, the idea of ​​allocative efficiency is that "consumers pay firms exactly the marginal cost (Price = Marginal Cost)… such a pricing strategy may prove to be a key condition for achieving an allocation of “Pareto optimal” resources. , where it is no longer possible to improve someone’s situation without making someone else’s situation worse.” (Griffiths and Wall, p93) When this condition is satisfied, the total consumer and producer surplus is maximized. Alternatively, productive efficiency concerns the manner of producing a good or service. To achieve productive efficiency, a company must use all available methods to produce a certain level of output at the lowest possible costs. To begin with, a firm that maximizes its profits under perfect competition has, first of all, too small a proportion of the total industry. the offer to exercise any influence on the market price of an identical product. So it's a price taker. Since no one has the power to control the industry, new companies have complete freedom, if any barriers, to enter the industry and compete with existing companies. In this case, the sole proprietorship faces a horizontal demand curve and its AR and MR coincide with the demand curve (shown in Figure 1).