In the long run, a perfectly competitive market will exhibit

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms cannot charge above the market price, which means that they earn zero economic profit in the long run. At the same time, consumers are able to purchase goods and services at the lowest possible price, which leads to maximum consumer surplus. The combination of zero economic profit for firms and maximum consumer surplus results in allocative and productive efficiency. Therefore, the correct answer is D, which states that a perfectly competitive market will exhibit allocative and productive efficiency.

In the Long Run, a Perfectly Competitive Market Will Exhibit