Final answer:
In a perfectly competitive market, government intervention is not typically required as the market naturally tends towards an efficient allocation of resources due to the presence of many small firms, homogeneous products, perfect information, and free entry and exit.
Step-by-step explanation:
The scenario in which government intervention is not typically justified is C. Perfect competition. In a perfectly competitive market, the forces of supply and demand are assumed to lead to an efficient allocation of resources, meaning that government intervention is generally not necessary. Government intervention is often considered in the event of market failures, which include monopoly (leading to potential abuse of market power), negative externalities (where the full cost of a product or service is not borne by the producer or consumer, thus affecting third parties), and imperfect information (where buyers or sellers do not have access to all the information they need to make informed decisions), as well as bounded rationality (where individuals make decisions that are rational within certain limits but may not be optimal).
In contrast, when a market exhibits characteristics of perfect competition, it contains many small firms, homogeneous products, perfect information, and free entry and exit. These conditions collectively ensure that no individual buyer or seller has the market power to influence prices, leading to an efficient market outcome without the need for government regulation.