At the market equilibrium,resources are allocated efficiently because

Question

Quizplus · Accepted Answer

At the market equilibrium, the price buyers pay accurately reflects the marginal cost of the resources used to produce the good. This is because buyers are willing to pay up to the marginal benefit they receive from consuming the good, which reflects the value of the resources used to produce it. At the same time, sellers are willing to produce up to the point where the marginal cost of producing another unit equals the price they receive for it. Therefore, resources are allocated efficiently, as any increase or decrease in production would result in either higher costs than benefits or lower benefits than costs, respectively.

At the Market Equilibrium,resources Are Allocated Efficiently Because