Final answer:
If public information could be used to earn abnormal returns, the market would not be considered semistrong-form efficient according to the Efficient Market Hypothesis. Market efficiency describes how well prices reflect available information, but it does not account for equitable outcomes across society.
Step-by-step explanation:
If public information can be used to earn abnormal returns, this suggests that the market is operating with at least some degree of efficiency. The concept of market efficiency is related to the Efficient Market Hypothesis (EMH), which suggests that at any given time, prices fully reflect all available information.
Semistrong-form efficiency, a level of EMH, posits that prices not only reflect all public information but that this information is swiftly incorporated into stock prices to the point that no excess returns can be consistently achieved by using this information. Hence, if public information could be used to obtain abnormal returns, the market in question would not be considered to have reached semistrong-form efficiency.
Nevertheless, the discussion of market efficiency must be met with scrutiny because efficiency in economics is not always synonymous with being ideal or equitable. The market price system is a highly efficient mechanism for conveying information about relative scarcities and causing market participants to revise decisions on supply and demand. However, issues like price controls and the impact of income distribution show that market efficiency does not necessarily lead to desirable outcomes for everyone in society.