What Two Conditions Must Hold for a Competitive Market to Produce

question 218

Multiple Choice

What two conditions must hold for a competitive market to produce efficient outcomes?

• A)Demand curves must reflect all costs of production, and supply curves must reflect consumers' full willingness to pay.
• B)Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay.
• C)Firms must minimize production costs, and consumers must minimize total expenditures.
• D)Firms must maximize profits, and consumers must all pay prices equal to their maximum willingness to pay.

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Definitions:

Competitors

Other businesses that offer similar products or services within the same market and compete for the same customers.

Suppliers

Entities that provide goods or services to another organization, often playing a critical role in the supply chain.

Resellers

Businesses or individuals that purchase goods or services with the intent to sell them rather than consume or use them.

Mission Statement

A formal summary of the aims and values of a company, organization, or individual, providing a clear direction and purpose.