(3) Average Revenue is equal to the Marginal Revenue Explanation: Perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. In the short run, perfectly-competitive markets are not productively efficient as output will not occur where marginal cost is equal to average cost (MC=AC). They are allocatively efficient, as output will always occur where marginal cost is equal to marginal revenue (MC=MR).