What two conditions must hold for a competitive market to produce efficient outcomes?

A) Demand curves must reflect all costs of production,and supply curves must reflect consumers' full willingness to pay.
B) Supply curves must reflect all costs of production,and demand curves must reflect consumers' full willingness to pay.
C) Firms must minimize production costs,and consumers must minimize total expenditures.
D) Firms must maximize profits,and consumers must all pay prices equal to their maximum willingness to pay.

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Donna mae Llarves · Accepted Answer

Final Answer : B, Explanation :  In order for a competitive market to produce efficient outcomes, both supply and demand curves must reflect the full costs and benefits of production and consumption. This means that supply curves must reflect all costs of production, including externalities, while demand curves must reflect consumers' full willingness to pay, also taking into account any externalities. By reflecting all relevant costs and benefits, the market will allocate resources efficiently, maximizing the overall welfare of society.

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