In order for market outcomes to maximise the total benefits to buyers and sellers, the markets must be perfectly competitive.

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In a perfectly competitive market, there are numerous buyers and sellers, homogeneous products, easy entry and exit, perfect information, and no market power. These conditions ensure that prices are set at equilibrium where the marginal cost equals the marginal benefit, and all gains from trade are realised, maximising the total benefits to buyers and sellers.

In Order for Market Outcomes to Maximise the Total Benefits