Question

Can someone give me a list of conditions for a market to be efficient

Answer 1

Market efficiency

With market efficiency, the economy is able to produce the maximum quantity of goods and services with the present input resources. The only way to increase the output in this scenario would be to increase the level of inputs. The players of market are of rational mentality here when they make decisions.

List of condition

• No externalities: There can be positive externality or negative externality. So they should be eliminated.
• Proper Allocation of information: All the relevant information required by the buyers and sellers should be present there in the market. A proper transparent system of information should be there.
• Resource mobility is efficient: There should be no lag on procurement and free flow of input resources.
• Perfect competition in the market: The market is efficient when there is a perfect competition that occurs when there are a number of sellers who are selling the same thing at a market price fixed by market forces.
• unbiased market price with the market's true value: It means that there will always be some markets that will be more efficient than the other and more efficient to some investors than others.
• businesses in the market are not interdependent on each other when there is market efficiency.