When a perfectly competitive,well-functioning market is not in equilibrium:
A) total surplus can be increased by a change in market price.
B) the market is not efficient.
C) there are exchanges that can make some better off without someone becoming worse off.
D) All of these are true.

Question

Quizplus · Accepted Answer

When a perfectly competitive, well-functioning market is not in equilibrium, total surplus can be increased by a change in market price (A), the market is not efficient (B), and there are exchanges that can make some better off without someone becoming worse off (C). All of these are true, as the market is not functioning optimally and there are potential gains from trade that are not being realized. Therefore, the best choice is D.

When a Perfectly Competitive,well-Functioning Market Is Not in Equilibrium