From the Viewpoint of Economic Efficiency, When Competitive Forces in an Industry

question 108

Multiple Choice

From the viewpoint of economic efficiency, when competitive forces in an industry are weak, market allocation will often lead to

• A) an output of the product that exceeds the amount consistent with ideal economic efficiency.
• B) an output of the product that is less than the amount consistent with ideal economic efficiency.
• C) an output of the product that equals the amount consistent with ideal economic efficiency.
• D) product prices that are below the cost of production.

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Definitions:

Government

The governing body of a nation, state, or community which creates and enforces laws, manages public resources, and regulates societal functions.

Government Intervention

Actions taken by a government to affect or interfere with market activities or uphold laws for economic or social outcomes.

Markets Fail

Occurs when a market economy does not efficiently allocate resources, leading to outcomes like monopolies, public goods issues, or externalities.

Efficient Allocation

The distribution of resources in a way that maximizes the net benefits to society or the economy.