Perfectly competitive factor and output markets are similar in that when both are present both generate:
A) an underproduction of output.
B) an efficient allocation of resources.
C) market prices that are greater than opportunity costs.
D) market prices that are less than opportunity costs.

Question

Quizplus · Accepted Answer

Both perfectly competitive factor and output markets lead to an efficient allocation of resources where goods and services are produced at the lowest possible cost and resources are allocated to their highest value use. This is achieved through the forces of supply and demand, where market prices are equal to the marginal cost of production, ensuring that resources are used efficiently. Therefore, options A, C, and D are incorrect.

Perfectly Competitive Factor and Output Markets Are Similar in That