Asked by Chhor Sotheanea on Jul 07, 2024
Verified
When a market is in equilibrium and there is no outside intervention to change the equilibrium price:
A) total surplus is minimized.
B) inefficiency is maximized.
C) no mutually beneficial trades are missed.
D) some mutually beneficial trades may be missed.
Total Surplus
The sum of consumer surplus and producer surplus, representing the total net benefit to society from a market transaction.
Equilibrium Price
A market condition where supply meets demand, and there is no inclination for price to change, leading to market balance.
Mutually Beneficial Trades
Exchanges that occur when all parties involved gain benefits or profits from the transaction.
- Comprehend the necessary conditions for market efficiency and the potential outcomes of straying from equilibrium.
Verified Answer
MV
Meher VishnuJul 13, 2024
Final Answer :
C
Explanation :
In equilibrium, the market is functioning efficiently and all mutually beneficial trades have already been made. Any further intervention may disrupt the allocation of resources and lead to inefficiencies or missed opportunities for mutually beneficial trades. Therefore, no outside intervention is necessary in a market that is already in equilibrium.
Learning Objectives
- Comprehend the necessary conditions for market efficiency and the potential outcomes of straying from equilibrium.