Explanation
Pure competition has a large number of sellers and buyers in the market and products are homogenous where there are no restrictions on entry or exit from the market. In pure competition, production occurs at the productive efficiency point where the price is equal to the minimum of average total cost in the long run. Even firms achieve allocative efficiency when marginal cost is equal to the price achieved in the long run. Thus, in pure competition, production occurs at its utmost efficient level which is easy to compare with other market structures.

Verified Answer
Although pure competition does not exist, it is studied to compare the differences between other market structures and study the similar characteristics between other markets to clearly understand the market structure.