Most economists would agree that this scenario would likely lead to industrial _______ (options: efficiency, inefficiency).

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
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Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.3P
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There are five shoe shops in the city of Friedmantown that are constantly competing for customers. Each shoe shop always looks for ways to improve its shoes while keeping costs under control.
Most economists would agree that this scenario would likely lead to industrial _______ (options: efficiency, inefficiency). 
Expert Solution
Step 1

When there is more than two shops in a market, that type of market is called Perfectly competitive market. As perfectly competitive market provides homogenous products both the buyers and sellers cannot influence the market.

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