If markets are perfectly competitive, then the production of goods

Question

Quizplus · Accepted Answer

In a perfectly competitive market, firms must use the least costly combination of resources in order to maximize profits. This means that they will produce goods at the lowest possible cost, which is achieved by using the most efficient production methods and sourcing the cheapest inputs. Therefore, A is the correct answer. B is incorrect because in a perfectly competitive market, firms must produce at the minimum average total cost to remain competitive. C is also incorrect as government intervention is not necessary in a perfectly competitive market. D is incorrect as the existence of business failures is a normal feature of any market, including perfectly competitive ones.

If Markets Are Perfectly Competitive, Then the Production of Goods