Competitive markets usually promote the efficient use of resources. This is because:
A) resource owners bear the wealth effects of their decisions.
B) managers always have the proper incentives to make decisions.
C) consumers usually provide the lists of corporate mistakes.
D) markets usually make equitable choices first.

Question

Quizplus · Accepted Answer

In a competitive market, resource owners will bear the wealth effects of their decisions, meaning they will be incentivized to use their resources efficiently in order to maximize their profits. This promotes the efficient use of resources. The other choices are incorrect because managers do not always make proper decisions, consumers do not necessarily provide lists of corporate mistakes, and markets do not always make equitable choices first.

Competitive Markets Usually Promote the Efficient Use of Resources