Economic efficiency in a free market occurs when
A)consumer surplus is maximized.
B)producer surplus is maximized.
C)the sum of consumer surplus and producer surplus is maximized.
D)price is as low as possible.

Question

Quizplus · Accepted Answer

Economic efficiency in a free market occurs when the sum of consumer surplus and producer surplus is maximized. This means that both consumers and producers benefit from the market transaction, and resources are being allocated efficiently. Maximizing only consumer or producer surplus may not result in overall economic efficiency. Price being as low as possible may lead to an inefficient allocation of resources or may not cover the cost of production for the producer, ultimately leading to market failure.

Economic Efficiency in a Free Market Occurs When