Perfect competition ________ an efficient outcome because ________.
A) achieves; total surplus is maximized
B) achieves; marginal benefit equals marginal cost
C) does not achieve; firms do not get to choose their price
D) does not achieve; firms produce goods with perfect substitutes
E) Both A and B are correct.

Question

Quizplus · Accepted Answer

Perfect competition achieves both an efficient outcome, where total surplus is maximized, and a socially optimal outcome, where marginal benefit equals marginal cost. Therefore, both options A and B are correct. Options C and D are incorrect because firms do have some control over their price in perfect competition and they do not necessarily produce goods with perfect substitutes.

Perfect Competition ________ an Efficient Outcome Because ________

Perfect Competition an Efficient Outcome Because