At an efficient market outcome,
A) deadweight loss is zero.
B) marginal benefit equals marginal cost at the efficient quantity.
C) prices just cover all opportunity costs of production.
D) total surplus is maximized.
E) all of the above are true.

Question

Quizplus · Accepted Answer

At an efficient market outcome, all of the above statements are true. Deadweight loss is zero because the market is allocating resources in the most efficient way possible. Marginal benefit equals marginal cost at the efficient quantity because there is no other allocation that would make both consumers and producers better off. Prices just cover all opportunity costs of production because firms are producing the optimal quantity of output given the prices of inputs. Total surplus is maximized because the market is allocating resources in the most efficient way possible.

At an Efficient Market Outcome