Which of the following are characteristics of an efficient market? (Select all that apply, can choose more than 1).

A. Only producer surplus is maximized.

B. Only consumer surplus is maximized.

C. Total surplus (aka social welfare) is maximized.

D. Quantity supplied equals quantity demanded.

E. Deadweight loss equals zero.

F. Willingness to pay exceeds willingness to sell at the margin.

G. Willingness to sell exceeds willingness to pay at the margin.

H. There is a tax.

I. There is a price ceiling.

J. There is a price floor.

K. Every consumer who purchases an item values it more than its cost of production.

Which of the following are characteristics of an efficient market? (Select all that apply, can choose more than 1). The market is efficient if it is operating at equilibrium. Therefore:

A. Only producer surplus is maximized. No. Firms are able to maximize their producer surplus by producing at profit-maximizing levels, which is rarely at equilibrium.

B. Only consumer surplus is maximized. Yes. When firms have market power, they can increase their surplus, but it is at the expense of consumer surplus.

C. Total surplus (aka social welfare) is maximized. Yes. Total surplus is always maximized when the market is at equilibrium.

D. Quantity supplied equals quantity demanded. Yes. At equilibrium, there is a price such that there is no surplus or shortage.

E. Deadweight loss equals zero. Yes. Dead-weight loss is the reduction of total surplus when the market is not operating efficiently.

F. Willingness to pay exceeds willingness to sell at the margin. No. The two are equal at equilibrium.

G. Willingness to sell exceeds willingness to pay at the margin. No. The two are equal at equilibrium.

H. There is a tax. No. Markets are only efficient if they are "free." Part of this means that there is no intervention from the government.

I. There is a price ceiling. No. Just as with taxes, price ceilings cause output to be below the equilibrium output level.

J. There is a price floor. No. The same with price floors.

K. Every consumer who purchases an item values it more than its cost of production. Yes. At equilibrium, there is a difference between demand and supply for all units.