Market efficiency is typically achieved by:

Question

Quizplus · Accepted Answer

Competitive firms that maximize benefits for consumers lead to market efficiency because they are constantly driven to produce goods and services at the lowest possible cost in order to remain competitive, which ultimately results in lower prices for consumers. This competition encourages innovation, quality improvement, and cost reduction, leading to an efficient allocation of resources in the market. The other options, such as dominant firms, corporate social responsibility, and command-and-control regulation, can lead to market inefficiencies by reducing competition and distorting market outcomes. Firms making positive economic profits do not necessarily lead to market efficiency, as they may be benefiting from market power rather than competition.

Market Efficiency Is Typically Achieved By