Perfect competition in product and factor markets results in:
A)maximum utility from the consumption of goods for all consumers.
B)efficient production,distribution,and output level.
C)efficient decision-making by policymakers.
D)minimal voluntary exchange.

Question

Quizplus · Accepted Answer

Perfect competition in both product and factor markets leads to the most efficient production, distribution, and output level. This is because in a perfectly competitive market, firms are price takers, meaning they have no market power, and must produce at the lowest possible cost in order to remain profitable. This leads to allocative and productive efficiency, which results in the most optimal outcome for society as a whole. Maximum utility, efficient decision-making by policymakers, and minimal voluntary exchange are not necessarily outcomes of perfect competition in both product and factor markets.

Perfect Competition in Product and Factor Markets Results In