Which type of economic system will produce the highest degree of allocative efficiency?
A)A perfectly competitive market system
B)A purely command economic system
C)A market system with limited price controls and price ceilings
D)A command system with limited market activity for nonessentials

Question

Quizplus · Accepted Answer

In a perfectly competitive market system, prices and quantities are determined by the forces of supply and demand. Resources are allocated to their most valued uses because producers only produce what consumers are willing to buy at a certain price, and consumers only purchase what they value more than the price they pay. This results in allocative efficiency, where resources are allocated to maximize society's satisfaction.

Which Type of Economic System Will Produce the Highest Degree