An economy in which there are no market failures and all industries are in a competitive long-run equilibrium is one where 1.allocative efficiency is achieved;
2.the economy is on the production possibilities boundary;
3.there is no incentive for firms to enter or leave industries.
A)1 and 2
B)2 and 3
C)1 and 3
D)1,2,and 3
E)2 only

Question

Quizplus · Accepted Answer

In a competitive long-run equilibrium with no market failures, allocative efficiency is achieved, the economy operates on the production possibilities boundary, and there is no incentive for firms to enter or leave industries as profits are normalized.

An Economy in Which There Are No Market Failures and All