The competitive market model is important because
A) It characterizes all the markets in the U.S. economy.
B) It shows how laissez faire can overcome market failures.
C) All industries function much like the competitive model.
D) It shows that firms can earn economic profits in the long run.

Question

Quizplus · Accepted Answer

While not all industries function exactly like the competitive model, the competitive model provides an important benchmark for understanding how markets function and the conditions necessary for efficient allocation of resources. It can also help identify areas where markets may be failing and where intervention may be necessary to improve outcomes. The other options are incorrect as they do not accurately describe the importance of the competitive market model.

The Competitive Market Model Is Important Because