Which of the following statement (s) is/

CUET Preparation Today

Start Free Mocks

Home Questions NF4ZN92ZFK

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Market Equilibrium

Question:

Which of the following statement (s) is/are incorrect in the context of perfect competition?

Options:

objectives of the consumers are to maximise their respective preference

objective of the firms are to maximise their respective profits.

the consumers’ and firms’ objectives are incompatible in the equilibrium

none of the above

Correct Answer:

the consumers’ and firms’ objectives are incompatible in the equilibrium

Explanation:

The correct answer is Option 3: the consumers’ and firms’ objectives are incompatible in the equilibrium

Option 1: objectives of the consumers are to maximise their respective preference. This is correct. In perfect competition, consumers are assumed to be rational and aim to maximize their utility or satisfaction.
Option 2: objective of the firms are to maximise their respective profits. This is also correct. Firms in perfect competition are assumed to be profit maximizers.
Option 3: the consumers’ and firms’ objectives are incompatible in the equilibrium. This is incorrect. In a perfectly competitive equilibrium, consumer and firm objectives are compatible. The equilibrium price and quantity result from the interaction of consumer demand and firm supply, where both consumers and firms are optimizing their respective goals. Consumers get goods at a price they are willing to pay, and firms sell goods at a price where they can make maximum profit.