In general (and in the absence of market failures), economic surplus will be maximized and economic efficiency will be achieved
A) when consumers and producers can agree on the most advantageous division of economic surplus.
B) when the government is able to impose an equilibrium price.
C) when resources are allocated such that production of the good is maximized.
D) in a competitive market where price is free to achieve its market- clearing equilibrium level.
E) when the government successfully determines what is best for society as a whole.

Question

Quizplus · Accepted Answer

Economic surplus is maximized and economic efficiency is achieved in a competitive market where price is free to achieve its market-clearing equilibrium level. The market mechanism ensures that resources are allocated efficiently and the most valued use of these resources is produced. Public intervention may cause distortions and fail to maximize overall social welfare. Therefore, in the absence of market failures, a competitive market is the best way to achieve economic efficiency and maximize economic surplus.

In General (And in the Absence of Market Failures), Economic