The value of output is maximized in a competitive market because:
A) entrepreneurs are always on the lookout to move resources into higher-value uses, in an effort to create more profit for themselves.
B) government taxation reduces the profit-motive of entrepreneurs.
C) social planners are better able to plan and make resource decisions when there are many buyers and sellers.
D) it is easy for an industry dominated by a single firm to achieve economies of scale, producing output at a low-cost.

Question

Quizplus · Accepted Answer

In a competitive market, entrepreneurs are motivated to produce output at the most efficient and profitable level possible, leading to the maximization of value. The profit motive incentivizes entrepreneurs to innovate, produce higher quality goods and services, and utilize resources more efficiently.

The Value of Output Is Maximized in a Competitive Market