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There is a theorem in economics called the efficiency theorem which explains how competitive market leads to Pareto efficiency being attained where resource allocation is efficient. A perfectly competitive market leads to three types of efficiencies. Production efficiency is where the active firms are the suppliers who supply at the least cost; while others are priced out of the market due to heavy competition. In the long run, as shown in figure, all the firms in the competitive market will be producing at the lowest optimal point of the long run average cost curve, implying that the productive resources are efficiently deployed.