Asked by
Olivia Stone
on Nov 05, 2024
Verified
In perfect competition, when firms are maximizing profits and households are maximizing utility,
A) Pareto optimality has been obtained.
B) voluntary exchange can be used to make both firms and households better off.
C) the outcome is inefficient.
D) individual welfare is maximized, but social welfare is not.
Pareto Optimality
A situation where resources are distributed in such a way that improving the situation of any single person would lead to the detriment of at least one other person.
Voluntary Exchange
An economic transaction where parties trade goods or services by mutual agreement without coercion.
Maximizing Profits
The process or strategy of adjusting production or operation dimensions to achieve the greatest possible financial return.
- Comprehend the core principles of perfect competition and how they facilitate efficient resource distribution.
- Familiarize oneself with the significance of consumer and producer surplus in the estimation of economic prosperity.
Verified Answer
MB
Learning Objectives
- Comprehend the core principles of perfect competition and how they facilitate efficient resource distribution.
- Familiarize oneself with the significance of consumer and producer surplus in the estimation of economic prosperity.