Which type of economic system will produce the highest degree of allocative efficiency?
A)a perfectly competitive market system
B)a purely command economic system
C)a market system with limited price controls and price ceilings
D)a command system with limited market activity for non-essentials

Question

Which type of economic system will produce the highest degree of allocative efficiency?
A)a perfectly competitive market system 
B)a purely command economic system 
C)a market system with limited price controls and price ceilings 
D)a command system with limited market activity for non-essentials

Quizplus · Accepted Answer

A perfectly competitive market system results in an efficient allocation of resources as individual buyers and sellers make rational decisions based on market prices. The market system with limited price controls and price ceilings may result in inefficiencies due to price distortions or shortages, while purely command economic systems limit the incentives for individuals to produce and innovate. The command system with limited market activity for non-essentials also limits choices and innovation, resulting in inefficiencies.

Which Type of Economic System Will Produce the Highest Degree