Question

Economic efficiency A. is a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production. B. is a market outcome in which the sum of consumer surplus and producer surplus is at a maximum. C. is a market outcome in which every individual is better off than they would be at any other market outcome. D. both a and b. E. all of the above. Economists define economic efficiency in this way A. to help policymakers understand the negative consequences of price ceilings. B. to help policymakers understand the negative consequences of price floors. C. to illustrate the benefits of a competitive market equilibrium. D. to help policymakers understand the negative consequences of taxes. E. all of the above.

Answer 1

The answers in this would be option D. or both a and b. for the first question and option E. for the second question or all of the above.

Step-by-step explanation:

• In Economics, economic efficiency in any market can be characterized by the most efficient market outcome that is possible given various circumstances.
• It implies the maximum social and economic welfare that a any market for any good or service can generate, indicated by the maximization of both consumer and producer surplus.This essentially means that both the consumers and sellers or producers in the market are equally well off and the overall market welfare is maximized.
• Market efficiency is also represented by the equalization of the marginal benefit or the additional benefit or utility obtained by the consumers or buyers from consuming one more or an additional unit of any particular good or service and marginal cost, which implies the cost of producing one more or an additional unit of that particular product or service.
• The economists usually define economic efficiency as a tool or parameter to understand and explain the negative economic consequences of any undesirable market outcome such as external government interventions in markets in the form of various market taxes and price manipulation techniques such as price ceilings or price floors. These are some of the forced external market intervention that disturb or dismantle the natural equilibrium of the market outcome which ensures the maximum social and economic welfare of all the concerned market identities,mainly consumers or buyers and sellers and producers.