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The source cautions that calling perfect competition 'efficient' should be taken with a grain of salt. What example does it give to illustrate that ability to pay is not the same as need?
APrices are set by the government in every efficient market
BEfficiency guarantees that every consumer gets what they want for free
CA homeless person may have no ability to pay for housing despite needing it
DA wealthy person always buys more housing than they need
Answer & Solution
Correct answer: C. A homeless person may have no ability to pay for housing despite needing it
1. The source warns that economic efficiency is a specific technical term, not a synonym for 'desirable in every way.'
2. Consumers' ability to pay reflects the income distribution in a society, not necessarily their actual need for a good.
3. It gives the example of a homeless person who may be unable to pay for housing simply due to insufficient income.
4. This example does not involve government-set prices or any claim that goods become free under efficiency.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.4 | Efficiency in Perfectly Competitive Markets_
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