Efficiency in competitive markets is characterized by ________.
A) all buyers pay more than their reservation value
B) all sellers receive less than their reservation value
C) every buyer whose willingness to pay is greater than or equal to marginal cost is served in the market
D) every seller makes positive economic profits in the short run

Question

Quizplus · Accepted Answer

Efficiency in competitive markets means that every buyer who is willing to pay as much as or more than the marginal cost of production is served in the market. This ensures that resources are allocated to produce the goods and services most valued by consumers, resulting in allocative efficiency. Options A and B are incorrect as they imply either buyers or sellers are worse off in the market. Option D is incorrect as some sellers may make negative economic profits in the short run due to market fluctuations.

Efficiency in Competitive Markets Is Characterized by ________