What indicates a perfectly competitive market’s efficiency?

In a perfectly competitive market, the statement that resources are allocated in such a way that no one can be made better off without making someone else worse off relates to the concept of allocative efficiency, which is key to understanding market dynamics. This situation, known as Pareto efficiency, occurs when the resources in an economy are distributed in a way that maximizes total welfare. Under these conditions, the goods produced are those that are most valued by consumers, reflecting their preferences and willingness to pay.

In an efficient market, it is impossible to reallocate resources to improve one party's situation without harming another. This equilibrium ensures that the total surplus – the sum of consumer and producer surplus – is maximized. In essence, in a perfectly competitive market, firms respond to consumer demand by adjusting production levels and maintaining prices that reflect the marginal cost of production, which leads to optimal resource allocation.

The other statements do not accurately convey the principles of efficiency in a perfectly competitive market. For instance, maximizing profits without regard to consumer preferences does not support efficiency in resource allocation. Similarly, suggesting that consumers always pay a premium contradicts the notion of competitive pricing, where prices tend to equal marginal costs. Finally, the idea that supply and demand cannot shift profitably