In the context of introduction to economics, companies' emphasis on profits has resulted in which of the following outcomes?

• A. a reduction in competition among firms
• B. universal access to goods and services
• C. a complete elimination of market failures
• D. greater efficiency in resource allocation

Answer: (D)

Verified step by step guidance

1. Understand the concept of profit maximization: Firms aim to maximize their profits by efficiently using resources to produce goods and services that consumers want.
2. Recognize that profit-driven firms compete with each other to attract customers, which generally increases competition rather than reducing it.
3. Know that while profit motives encourage firms to allocate resources efficiently, they do not guarantee universal access to goods and services, as some consumers may be priced out of the market.
4. Acknowledge that market failures, such as externalities or public goods, are not completely eliminated by profit motives alone, since these issues often require government intervention or regulation.
5. Conclude that the primary outcome of firms emphasizing profits is greater efficiency in resource allocation, as firms seek to produce at the lowest cost and meet consumer demand effectively.