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What is true if a market is efficient?



A. The market allocates outputs to the buyers who value it the most
B. The market allocates buyers to the sellers who can produce the good at least cost
C. The quantity produced in the market maximizes the sum of consumer and producer surplus
D. All of the above are true
E. None of the above are true

This question is part of Microeconomics [Ch.
Asked by Emy_ on May 27, 2017

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2 Answers

C. Kenway

C. Kenway
Content Writer, Jacksonville

Answered on Feb 20, 2019

Correct answer is option D – All of the above.
In economics, market efficiency refers to a degree in which market prices reflect all available and relevant information.

A market is efficient if the maximum amount of goods and services are being produced with a given level of resources, and if no additional output is possible without increasing the amount of inputs. The quantity produced in the market maximizes the sum of consumer and produced surplus.

The market also allocates buyers to the sellers who can produce the good at least cost. It allocates outputs to the buyers who value it the most.

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John Smith

John Smith

Answered on May 27, 2017

All of the above are true
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