In perfect competition, any profit-maximizing producer faces a market price equal to its marginal cost (P = MC). Such markets are allocatively efficient, as output will always occur where marginal cost is equal to average revenue i.e.Perfect competition provides both allocative efficiency and productive efficiency: This equilibrium would be a Pareto optimum. In theoretical models where conditions of perfect competition hold, it has been demonstrated that a market will reach an equilibrium in which the quantity supplied for every product or service, including labor, equals the quantity demanded at the current price. In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition.
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