In a competitive market economy, ﬁrms select the least-cost production technique because
A) such choices will result in full employment of available resources.
B) to do so will maximize the ﬁrms' proﬁts.
C) this will prevent new ﬁrms from entering the industry.
D) "dollar voting" by consumers mandates such a choice.

Question

Quizplus · Accepted Answer

In a competitive market economy, firms aim to maximize their profits. By selecting the least-cost production technique, they can minimize their costs and increase their profits. This is the fundamental principle behind the profit motive in a market economy. Therefore, answer B is the best choice.

In a Competitive Market Economy, ﬁRms Select the Least-Cost Production