Perfectly Competitive Markets Are Efficient Because

question 182

Multiple Choice

Perfectly competitive markets are efficient because

• A) they always reach equilibrium.
• B) firms in the market are price takers.
• C) the cost to society for producing the goods is exactly equal to the value that society places on the good.
• D) the long run equilibrium assures that the prices of resources will not increase.

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Definitions:

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Profitability Index

A calculation used to assess the relative profitability of an investment, computed as the present value of future cash flows divided by the initial investment cost.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.