Praxis II Citizenship

Category - Economics

If a market is efficient, prices reflect all of the available:
  1. Information.
  2. Incentives.
  3. Factors of production.
  4. Externalities.
Explanation
Answer: A - If a market is efficient, prices reflect all of the available information. If market prices only reflect historical prices, it has a weak form of efficiency. If market prices reflect all publicly known information, it has semi-strong efficiency. If market prices reflect all privately known information (about the product), it has strong efficiency. It is possible for a market to be deficient in one of these categories and successful in others.
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