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:

Scientific Psychology

A branch of psychology that applies scientific methods to study and understand human thought, behavior, and emotion.

Folk Psychology

The informal, common-sense understanding and explanation of human behavior and mental processes, often contrasted with scientific psychology.

Real

Existing or occurring as a fact; actual rather than imaginary, ideal, or fictitious.

Forms

In philosophical context, abstract representations or ideals of objects and concepts, which are believed to embody their most essential qualities.