If Resources Are Misallocated in a Perfectly Competitive Market, Then

question 130

Multiple Choice

If resources are misallocated in a perfectly competitive market, then, in the long run, profit opportunities will:

• A)bring about a more efficient allocation of resources.
• B)bring about a less efficient allocation of resources.
• C)not bring about a reallocation of resources unless there is government regulation.
• D)not bring about a reallocation of resources unless firms are subsidized.

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Definitions:

Private Sector

The private sector encompasses businesses and entities that are not owned or operated by the government, operating primarily for profit.

Political Decision Making

The process by which public policies are formulated and decided upon by individuals and groups within governmental systems.

Free-Rider Problem

A situation in which individuals benefit from resources, goods, or services without paying for the cost of the benefit, leading to underprovision of those goods or services.

Local Government

A form of public administration which, in a majority of contexts, exists as the lowest tier of administration within a given state.