When property rights are well defined and markets are competitive,
A) the total gains from trade (the combined area of producer and consumer surplus) are maximized at the market equilibrium.
B) the market equilibrium is consistent with economic efficiency in that all units creating more benefit than cost have been produced.
C) the market will automatically move toward the price and quantity where the quantity supplied and the quantity demanded are in balance.
D) all of the above are true.

Question

Quizplus · Accepted Answer

When property rights are well defined and markets are competitive, all the statements are true: the total gains from trade are maximized, the market equilibrium is efficient, and the market naturally moves toward equilibrium.

When Property Rights Are Well Defined and Markets Are Competitive