Question

'When economists say that market equilibrium is consistent with economic efficiency; they mean the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity: all units creating more benefit than cost have been produced: some units have been produced that cost more than the benefits they create consumers and producers have made decisions without properly taking into account the market price.'

          'When economists say that market equilibrium is consistent with economic efficiency; they mean
the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity:
all units creating more benefit than cost have been produced:
some units have been produced that cost more than the benefits they create
consumers and producers have made decisions without properly taking into account the market price.'

Show more…

Added by Robert G.

Principles of Economics

Gregory Mankiw 8th Edition

Instant Answer

Solved by Expert Juan Nicolás

03/16/2022

Step 1

This refers to the combined area of producer and consumer surplus, which represents the benefits that both producers and consumers receive from participating in the market. In other words, at market equilibrium, the quantity of goods or services being produced Show more…

Show all steps

lock

Thanks for your feedback!

'When economists say that market equilibrium is consistent with economic efficiency; they mean the total gains from trade (the combined area of producer and consumer surplus) are smaller than potentially could be the case at a different price and quantity: all units creating more benefit than cost have been produced: some units have been produced that cost more than the benefits they create consumers and producers have made decisions without properly taking into account the market price.'

Play audio

Feedback

Powered by NumerAI

Juan Nicolás and 99 other subject Macroeconomics educators are ready to help you.

Ask a new question

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Key Concepts

Recommended Videos

Recommended Textbooks

Transcript

Ace is your personal tutor. It breaks down any question with clear steps so you can learn.

Start Using Ace

Continue solving this problem

Create a free account to:

View full step-by-step solution
Ask follow-up questions with Ace AI
Save progress and study later