Question18 Which of the following are not needed for market efficiency? Goods are excludable and rival Consumers and producers are price-takers Homogeneous goods Easy access to goods ResetMaximum marks: 1 Flag question undefined

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BlackTom AI · Accepted Answer

To evaluate which statements are not needed for market efficiency, I will examine each option in turn and connect it to the features typically associated with efficient market outcomes.
Option 1: 'Goods are excludable and rival.' In classic perfectly competitive markets, private goods are indeed excludable and rival, which helps markets allocate resources efficiently through price signals. This characteristic actually supports market efficiency rather than undermines it, so calling it 'not needed' contradicts standard theory. The claim here is misaligned with the conventional view that excludability and rivalry are part of the private good framework that, under perfect competition, yields efficient outcomes.
Option 2: 'Consumers and producers are price-takers.' Price-taking behavior is a cornerstone of perfect competition. It ensures that no single buyer or seller can influence the market price, which leads to price signals that reflect marginal costs and benefits, guiding efficient production and consumption. If participants could influence prices (price-setting power), the market would depart from the efficient competitive equilibrium. Therefore, price-taking is indeed needed for efficiency, making this option aligned with the efficient market model rather than not needed.
Option 3: 'Homogeneous goods.' The assumption that goods are homogeneous means that products are perfect substitutes, so buyers have no preference for one supplier over another beyond price. This simplification helps ensure that prices reflect true marginal costs and that resources are allocated efficiently across producers. If goods were heterogeneous, differentiation could lead to search costs and imperfect substitution, potentially reducing efficiency. Hence, homogeneity is typically a facilitator of efficient outcomes in standard models, not something that hampers efficiency—and thus not something 'not needed.'
Option 4: 'Easy access to goods.' Easy access reduces transaction and search costs, enabling smoother, more competitive exchanges and better alignment of supply with demand. Efficient markets rely on low barriers to entry and access to information and goods to ensure that prices accurately coordinate production and consumption. Obstacles to access would impede efficiency, so 'easy access' is indeed conducive to efficiency rather than detrimental. 
In summary, each of options 2, 3, and 4 describes features commonly associated with efficient market outcomes, while option 1 asserts a condition that actually aligns with efficiency in standard theory rather than opposing it. The assertion that 'Goods are excludable and rival' is the one that does not fit the premise of being ‘not needed’ for market efficiency, given its supportive role in private-goods markets in classic models.

Question18 Which of the following are not needed for market efficiency? Goods are excludable and rival Consumers and producers are price-takers Homogeneous goods Easy access to goods ResetMaximum marks: 1 Flag question undefined

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