The efficiency of competitive markets happens because
A) of the benevolence of the butcher, the brewer, and the baker.
B) people make environmentally aware purchasing decisions.
C) prices adjust to make buying plans and selling plans compatible.
D) government organizes and monitors production.
E) the U.S. economy uses a command system to allocate resources within the competitive markets.

Question

Quizplus · Accepted Answer

Prices in competitive markets adjust to ensure that buyers and sellers can mutually benefit from transactions. This efficient allocation of resources occurs without the need for government intervention or environmentally aware purchasing decisions by consumers. The benevolence of individuals, as mentioned in choice A, is not an inherent feature of competitive markets. Choice D is incorrect because government involvement usually leads to inefficiencies and higher costs. Choice E is also incorrect because the U.S. economy utilizes a market system, not a command system.

The Efficiency of Competitive Markets Happens Because