A competitive equilibrium:
A)results in an efficient and equitable allocation.
B)is characterized by equal marginal rates of substitution.
C)occurs when resources are equally allocated between different producers.
D)is not necessarily utility-maximizing.

Question

Quizplus · Accepted Answer

A competitive equilibrium is characterized by equal marginal rates of substitution among consumers, which ensures that the allocation of goods and services is efficient in the sense that no one can be made better off without making someone else worse off. This concept does not inherently guarantee equity, equal allocation of resources among producers, or that it is utility-maximizing in all contexts.

A Competitive Equilibrium