________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.
A)Competition
B)Voluntary exchange
C)Equity
D)A centrally planned economy

Question

Quizplus · Accepted Answer

Competition among firms forces them to constantly improve their production processes, reduce costs, and offer better quality goods and services. The firms that are most efficient are able to produce at lower costs and offer lower prices, and therefore can attract more customers away from their competitors. This promotes economic efficiency as resources are allocated to the production of goods and services that consumers value the most, while wasteful and inefficient production is discouraged. Voluntary exchange, equity, and a centrally planned economy do not necessarily promote economic efficiency in the same way that competition does.

________ Increases Economic Efficiency Because It Forces Firms to Produce