In a competitive market for a private good with no price or quantity regulations,no external cost nor external benefit,low transactions costs,and no taxes or subsidies,
A) the allocation of resources is planned by the government.
B) production is organized by government organizations.
C) efficiency can be attained in the market with no government intervention.
D) efficiency is usually be achieved by majority rule.
E) efficiency is generally obtained by using a command system.

Question

Quizplus · Accepted Answer

In a competitive market with no government intervention and no externalities, the market forces of supply and demand will lead to an efficient allocation of resources. The invisible hand of the market will allocate resources where they are most highly valued, and the resulting equilibrium will optimize both consumer and producer surplus. Therefore, government intervention is not needed to achieve efficiency in such a market.

In a Competitive Market for a Private Good with No