QuestionMay 25, 2025

Why is a market considered efficient? Equilibrium price clears away any surplus or shortage Equilibrium price tells the consumer how much they can afford to purchase, ceteris paribus Equilibrium price tells the producer how much they can afford to produce, ceteris paribus Markets are only efficient if the government imposes a ceiling or floor Two of the above are correct

Why is a market considered efficient? Equilibrium price clears away any surplus or shortage Equilibrium price tells the consumer how much they can afford to purchase, ceteris paribus Equilibrium price tells the producer how much they can afford to produce, ceteris paribus Markets are only efficient if the government imposes a ceiling or floor Two of the above are correct
Why is a market considered efficient? Equilibrium price clears away any surplus or shortage Equilibrium price tells the consumer how much they can afford to purchase, ceteris paribus Equilibrium price tells the producer how much they can afford to produce, ceteris paribus Markets are only efficient if the government imposes a ceiling or floor Two of the above are correct

Solution
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Answer

Two of the above are correct Explanation 1. Identify correct statements An efficient market is characterized by the equilibrium price clearing any surplus or shortage, and it reflects the balance between supply and demand. The equilibrium price does not directly tell consumers or producers how much they can afford to purchase or produce; rather, it indicates the quantity where supply equals demand. 2. Evaluate government intervention Markets are generally considered efficient without government-imposed ceilings or floors, which can lead to inefficiencies like shortages or surpluses. 3. Determine correct options The correct statements are: "Equilibrium price clears away any surplus or shortage" and "Equilibrium price tells the consumer how much they can afford to purchase, ceteris paribus."

Explanation

1. Identify correct statements<br /> An efficient market is characterized by the equilibrium price clearing any surplus or shortage, and it reflects the balance between supply and demand. The equilibrium price does not directly tell consumers or producers how much they can afford to purchase or produce; rather, it indicates the quantity where supply equals demand.<br /><br />2. Evaluate government intervention<br /> Markets are generally considered efficient without government-imposed ceilings or floors, which can lead to inefficiencies like shortages or surpluses.<br /><br />3. Determine correct options<br /> The correct statements are: "Equilibrium price clears away any surplus or shortage" and "Equilibrium price tells the consumer how much they can afford to purchase, ceteris paribus."
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