Final answer:
In perfectly competitive markets with complete property rights and costless negotiation, an efficient allocation of resources can be achieved through the interaction of profit-maximizing firms and utility-maximizing consumers.
Step-by-step explanation:
In perfectly competitive markets with complete property rights and costless negotiation, an efficient allocation of resources can be reached. Allocative efficiency means that resources are allocated to their best alternative use, while productive efficiency means that goods and services are produced at the lowest possible cost.
In this scenario, producers in perfectly competitive markets aim to maximize profits by producing the quantity of goods and services where marginal cost equals marginal revenue. Consumers, on the other hand, aim to maximize their utility by consuming goods and services up to the point where marginal utility equals the price they are willing to pay.
When both profit-maximizing firms and utility-maximizing consumers interact, the resulting outcome is an efficient allocation of resources. This is because producers are producing the quantity demanded by consumers and consumers are consuming goods and services up to the point where their marginal utility equals the price they are willing to pay.