Exhibit 7-13
-Informational efficiency
A)can be achieved only when everyone knows everyone else's marginal benefits and marginal costs.
B)occurs when buyers and sellers can communicate their respective marginal benefits and marginal costs to each other.
C)is easily proven mathematically to occur in competitive markets, much like Pareto efficiency has been proven to occur in such markets.
D)occurs in a centralized allocation system like that of the former Soviet Union.
E)occurs when it is costless to send messages.

Question

Exhibit 7-13 
-Informational efficiency
A)can be achieved only when everyone knows everyone else's marginal benefits and marginal costs. 
B)occurs when buyers and sellers can communicate their respective marginal benefits and marginal costs to each other. 
C)is easily proven mathematically to occur in competitive markets, much like Pareto efficiency has been proven to occur in such markets. 
D)occurs in a centralized allocation system like that of the former Soviet Union. 
E)occurs when it is costless to send messages.

Quizplus · Accepted Answer

Informational efficiency occurs when buyers and sellers can communicate their respective marginal benefits and marginal costs to each other. It is not dependent on everyone knowing everyone else's marginal benefits and marginal costs or on the cost of message sending. It has not been proven mathematically to occur in competitive markets, although it is commonly assumed to exist in such markets. A centralized allocation system is not likely to achieve informational efficiency.

Exhibit 7-13 -Informational Efficiency