If a market is efficient then_______?
Correct answer: B. all these answers
- A. the market allocates buyers to the sellers who can produce the good at least cost
- B. all these answers
- C. none of these answers
- D. the quantity produced in the market maximizes the sum of consumer and producer surplus
- E. the market allocates output to the buyers that value it the most
Explanation
Efficiency requires both producing at the lowest possible cost and allocating goods to buyers who value them most. These conditions make total consumer plus producer surplus as large as possible, so all listed statements are true.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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