When a perfectly competitive,well-functioning market is in equilibrium:
A) total surplus is maximized.
B) the market is efficient.
C) deadweight loss is zero.
D) All of these are true.

Question

Quizplus · Accepted Answer

When a perfectly competitive, well-functioning market is in equilibrium, total surplus is maximized, meaning there is no way to make someone better off without making someone else worse off. This indicates that the market is efficient as resources are allocated to their most valued use. It also means that there is no deadweight loss, which refers to the loss of total surplus that occurs when the quantity of a good or service traded is below or above the optimal level. Therefore, all three statements are true.

When a Perfectly Competitive,well-Functioning Market Is in Equilibrium