A market has reached an efficient outcome when
A) producers are able to produce and sell as much as they like.
B) total surplus is minimized.
C) producer surplus is greater than consumer surplus.
D) consumers are able to purchase as much as they like.
E) total surplus is maximized.

Question

Quizplus · Accepted Answer

An efficient outcome occurs when total surplus is maximized. This means that the combination of producer surplus and consumer surplus is as large as possible. This ensures that resources are allocated efficiently and that the market is operating at its full potential. Choices A, B, C, and D do not necessarily guarantee an efficient outcome.

A Market Has Reached an Efficient Outcome When