The competitive equilibrium model
A)describes in detail how every individual behaves in a real-world market.
B)combines supply and demand to illustrate how prices are established.
C)incorporates only the profit-maximization incentives of firms.
D)explains how a health-care system can be properly managed.
E)incorporates only the utility-maximization incentives of individuals.

Question

Quizplus · Accepted Answer

The competitive equilibrium model combines the forces of supply and demand to determine the price at which goods are produced and consumed in a market. It does not describe individual behavior or incorporate only profit- or utility-maximization incentives. It also cannot be used to explain how to manage a health-care system.

The Competitive Equilibrium Model