In a perfectly competitive market economy,business failures can benefit society by causing
A)A reallocation of resources to better uses.
B)An increase in market power for the remaining firms.
C)A decline in market prices as remaining firms attempt to increase sales and stay in business.
D)An increase in the number of jobs for bankruptcy lawyers and accountants.

Question

Quizplus · Accepted Answer

Business failures can lead to a reallocation of resources from less efficient firms to more efficient ones, allowing for the better use of resources and potentially increasing overall economic efficiency. This can ultimately benefit society as a whole. The other choices (B, C, and D) do not necessarily benefit society and may have negative consequences such as reduced competition, higher prices, and job losses.

In a Perfectly Competitive Market Economy,business Failures Can Benefit Society