A market is efficient if the price that buyers pay is equal to the marginal cost of producers.

Question

Quizplus · Accepted Answer

In an efficient market, prices reflect all available information, including the costs of production. When the price buyers pay equals the marginal cost of production, resources are allocated efficiently, meaning that goods are being produced at the lowest possible cost and in quantities that reflect consumer demand. This condition is a key aspect of economic efficiency.

A Market Is Efficient If the Price That Buyers Pay