Markets under _____ deliver efficient outcomes; markets with _____ deliver inefficient outcomes.
A)perfect competition; strategic interactions
B)strategic interactions; perfect competition
C)limited rivalry; strong rivalry
D)strong rivalry; limited rivalry

Question

Quizplus · Accepted Answer

Perfect competition is characterized by a large number of buyers and sellers who have no ability to influence the market price. This leads to an efficient allocation of resources as producers have no incentive to produce more or less than the socially optimal level. On the other hand, markets with strategic interactions, such as oligopolies or monopolies, are characterized by firms having market power and the ability to influence prices. This leads to inefficient outcomes as producers may produce less than the social optimum or charge higher prices than they should.

Markets Under _____ Deliver Efficient Outcomes; Markets with _____ Deliver

Markets Under _ Deliver Efficient Outcomes; Markets with _ Deliver