The behavior of the perfectly competitive firm
A)theoretically leads to an inefficient allocation of resources.
B)maximizes the benefits to consumers, given the resources available to the economy.
C)reduces output in order to raise prices in the short term.
D)results in excess capacity and inefficiency.

Question

Quizplus · Accepted Answer

The behavior of a perfectly competitive firm leads to maximizing the benefits to consumers by producing at the lowest possible cost and charging a price equal to the marginal cost. This allocation of resources is efficient in the sense that it maximizes consumer surplus and producer surplus. Therefore, choice B is the best option.

The Behavior of the Perfectly Competitive Firm