It can be inferred that when firms and consumers respond to changing price signals in a competitive market with well-defined and transferable property rights:
A) they will achieve the efficient solution in the marketplace.
B) they will rarely achieve the efficient solution given flexible prices.
C) they will, in the real world, seldom act according to marginal benefit and marginal cost analysis.
D) there will generally be a shortage of apples, because they are scarce.

Question

Quizplus · Accepted Answer

When firms and consumers respond to changing price signals in a competitive market with well-defined and transferable property rights, they will achieve the efficient solution in the marketplace. This is because, in such a market, prices act as signals that convey information about the relative scarcity of goods and services. Firms and consumers respond to these price signals by adjusting their production and consumption decisions based on marginal benefit and marginal cost analysis. As a result, market participants can efficiently allocate resources and produce the goods and services that are most valued by consumers. Therefore, option A is the best choice.

It Can Be Inferred That When Firms and Consumers Respond