Which of the following statements is true of a perfectly competitive market?
A) At equilibrium, it is possible to make someone better off without making someone else worse off.
B) The equilibrium price in a competitive market efficiently allocates scarce resources to participants.
C) The equilibrium price is determined by a few large firms in the market.
D) The sum of consumer surplus and producer surplus is not maximized at the equilibrium.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price is determined by the intersection of the supply and demand curve. This price allocates the scarce resources efficiently, as each participant is willing to pay the same amount for the good or service. Therefore, choice B is correct. Choices A, C, and D are incorrect as they do not accurately describe a perfectly competitive market.

Which of the Following Statements Is True of a Perfectly