Efficiency in a market is achieved when:

• A. firms maximize their profits without regard to consumer welfare
• B. resources are allocated such that marginal benefit equals marginal cost
• C. all goods are produced at the lowest possible cost, regardless of consumer preferences
• D. income is distributed equally among all participants

Answer: (B)

Verified step by step guidance

1. Understand the concept of efficiency in microeconomics, which typically refers to allocative efficiency where resources are distributed to maximize total welfare in the market.
2. Recall that allocative efficiency occurs when the marginal benefit (MB) to consumers equals the marginal cost (MC) of producing the good or service, ensuring that the value consumers place on the last unit produced matches the cost of producing it.
3. Analyze each option by comparing it to the definition of allocative efficiency: ignoring consumer welfare or focusing solely on profit maximization does not guarantee efficiency; producing at the lowest cost without considering consumer preferences may lead to inefficiency; equal income distribution relates to equity, not efficiency.
4. Identify that the condition 'resources are allocated such that marginal benefit equals marginal cost' directly corresponds to the economic definition of efficiency in a market.
5. Conclude that the correct understanding of market efficiency is when \(\text{MB} = \text{MC}\), ensuring optimal allocation of resources that maximizes total surplus.