True or false: Perfectly competitive markets lead to efficient production and consumption. Question 9 options: True False

The statement is True.

In perfectly competitive markets, resources are allocated efficiently, leading to optimal production and consumption levels. This is because:

1. Price Takers: Firms and consumers accept market prices as given and cannot influence them.
2. Maximization of Welfare: They produce and consume until the price equals marginal cost, ensuring that resources are used where they are most valued.
3. No Barriers to Entry or Exit: This allows for the adjustment of supply and demand in response to changes in market conditions.
4. Homogenous Products: Consumers view products as identical, leading to competition based on price rather than differentiation.

Therefore, perfectly competitive markets tend to achieve productive and allocative efficiency.