Market equilibrium maximizes the total surplus in a market and therefore it is efficient.

Question

Quizplus · Accepted Answer

Market equilibrium represents the point at which the marginal benefit equals the marginal cost, and this maximizes the total surplus (the sum of consumer surplus and producer surplus) in the market. Thus, market equilibrium is considered to be efficient in terms of allocating resources and generating the highest level of societal welfare.

Market Equilibrium Maximizes the Total Surplus in a Market and Therefore