In perfect competition, the condition that ensures that the right things are produced is

Question

Quizplus · Accepted Answer

In perfect competition, firms are price takers and therefore they cannot influence the market price. Thus, the profit maximizing output level is where marginal cost (MC) equals price (P). This condition ensures that resources are allocated efficiently and that the right goods are produced at the right price. Therefore, option B is the correct choice. The other options are not applicable in perfect competition. Option A refers to consumer equilibrium in a monopoly market; option C refers to the minimum average total cost in the long run in a monopolistic competition market, and option D refers to a condition for profit maximization in a monopolistic competition market.

In Perfect Competition, the Condition That Ensures That the Right