Question

true or false: a market that reaches efficient equilibrium for price and quantity will result in a total surplus that is as large as possible. this large total surplus allows the consumers and producers to share the total surplus in a fair and equitable way.

Answer 1

An efficient market equilibrium maximizes total surplus, but the fair distribution of this surplus between consumers and producers is not guaranteed by market efficiency alone.

Step-by-step explanation:

The statement is true: a market that reaches an efficient equilibrium for price and quantity maximizes total surplus, which is the sum of consumer surplus and producer surplus. This maximized total surplus indicates that the economy is deriving as much benefit as possible from its scarce resources, and all the gains from trade have been achieved. However, the distribution of total surplus between consumers and producers may not necessarily be fair and equitable, as this depends on various factors such as market power, tax policies, and externalities.