When technology allows many firms to operate efficiently in the markets, which market structure represents a better use of society's resources?  

The correct answer is Perfect competition .

​There are four types of competition in a free market system: perfect competition, monopolistic competition, oligopoly, and monopoly.

 Important Points

• Perfect competition
  • It occurs when all companies sell identical products, market share does not influence price, companies are able to enter or exit without barriers, buyers have perfect or full information, and companies cannot determine prices.
  • Following are the characteristics of perfect competition:
    • Large numbers of buyers and sellers in the market.
    • Free entry and exit of firms in the market.
    • Each firm should be selling a homogeneous product. Buyers and sellers should possess complete knowledge of the market.
    • No price control.
  • When technology allows many firms to operate efficiently in the markets, this market structure represents a better use of society's resources

Additional Information

•  Under monopolistic competition, many sellers offer differentiated products—products that differ slightly but serve similar purposes. By making consumers aware of product differences, sellers exert some control over price.
• In an oligopoly, a few sellers supply a sizable portion of products in the market. They exert some control over price, but because their products are similar, when one company lowers prices, the others follow.
• In a monopoly, there is only one seller in the market. The market could be a geographical area, such as a city or a regional area, and does not necessarily have to be an entire country. The single seller is able to control prices.