Markets in which the behavior of the firms theoretically leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers are
A)monopolistic competition and oligopoly.
B)monopoly and oligopoly.
C)monopolistic competition and monopoly.
D)perfect competition and perfectly contestable.

Question

Quizplus · Accepted Answer

Perfect competition and perfectly contestable markets are the two market structures in which firms behave in a way that leads to an efficient allocation of resources that maximizes the benefits to consumers given the resources available to consumers. In perfect competition, there are many firms competing with identical products and no barriers to entry or exit, leading to an optimal allocation of resources. In perfectly contestable markets, although there may be a small number of firms, there are no barriers to entry or exit and new firms can enter the market and compete, leading to an efficient allocation of resources. Monopoly, monopolistic competition, and oligopoly do not necessarily lead to an efficient allocation of resources.

Markets in Which the Behavior of the Firms Theoretically Leads