In the Absence of Market Failures, Allocative Efficiency Is Achieved

question 61

Multiple Choice

In the absence of market failures, allocative efficiency is achieved only under perfect competition because only this market structure results in

• A) productive efficiency.
• B) P = MC.
• C) complete freedom of entry and exit.
• D) zero long- run profits.
• E) maximization of profits through competition.

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Definitions:

U.S. Automobile

Vehicles manufactured by companies based in the United States, typically referring to cars and trucks.

National Income

The total value of all goods and services produced by a country over a specific period, often used as a measure of the economic health of a country.

Labor Services

The tasks and efforts provided by workers in exchange for wages.

Foreign Suppliers

Providers of goods and services from outside the buyer's country, often involved in international trade.