Question

In 3 or 4 sentences, explain the relationship between the equilibrium price and efficiency.

Answer 1

At the equilibrium price, producers use their resources to produce goods and services that consumers are willing to buy. Producers are able to sell all of their products, so there isn't an excess or surplus of goods. Since there is no excess or surplus of goods, they didn't waste their given resources. If markets are functioning at an equilibrium, the economy would be functioning efficiently. This happens when producers in many markets do not waste their resources, by allocating their resources to make goods and services that consumers will demand and consume.

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Answer 2

When a market is in equilibrium, then that means that the economy is functioning efficiently. This happens because producers in many markets do not waste their resources. They can, instead, use these resources to produce based on the supply and demand laws which means that the economy is efficient.