Under perfect competition, the market mechanism, without any government regulation, is capable of
A)allocating resources efficiently.
B)solving equity problems.
C)making the average cost of labor equal to the average cost of all commodities.
D)making more income available to the poor.

Question

Quizplus · Accepted Answer

Under perfect competition, the market mechanism operates efficiently and allocates resources in the most efficient manner possible. This is because perfect competition promotes competition among firms, which naturally drives down prices and ensures that resources are allocated to their most productive uses. As a result, perfect competition leads to the highest level of economic efficiency possible, as resources are allocated to their most productive uses and the economy functions at its full potential.

Under Perfect Competition, the Market Mechanism, Without Any Government Regulation