While _____ markets do not necessarily lead to efficient outcomes, _____ markets tend to yield efficient outcomes.
A)Strategic; prisoner-based
B)Prisoner-based; strategic
C)Competitive; strategic interactions in
D)Strategic interactions in; competitive

Question

Quizplus · Accepted Answer

Strategic interactions in markets refer to situations where actions of one market participant affect the outcomes of other market participants. In such situations, there can be inefficiencies such as market power, externalities, and incomplete information. However, in a competitive market, where there are many buyers and sellers and no single participant can influence the market price, efficient outcomes tend to be achieved. Therefore, the best choice is option D.

While _____ Markets Do Not Necessarily Lead to Efficient Outcomes