When a market is efficient:
A) there is no exchange that can make anyone better off without someone becoming worse off.
B) a central planner must be involved.
C) total surplus is zero.
D) an increase in price will reduce the deadweight loss.

Question

Quizplus · Accepted Answer

When a market is efficient, all available information is reflected in the prices and there is no opportunity for an exchange that makes someone better off without making someone else worse off. This is also known as Pareto efficiency. In other words, the allocation of goods and resources in the market is such that no one can be made better off without making someone else worse off.

When a Market Is Efficient