1 Answer | Add Yours
There are at least two ways to answer this question.
On the one hand, we can say that when a resource has been used optimally, the market for it reaches equilibrium. There is no shortage and no surplus of the resource. What this means is that the price of the resource has gotten to the point where there is no consumer who wants the product and cannot have it and there is no supplier who wants to sell more of the product and cannot find a buyer. In economic terms, this is optimal use of the resource.
We can also talk, however, about Pareto efficiency. What this says is that, when resources are used in an optimal way, we reach a state where no individual’s circumstances can be improved without making someone else’s circumstances worse. In other words, we are as well-off as we can be as a society. This is a much more macro-level view of optimal use of resources.
The answer that you are most likely being asked for is the first one. From that, more micro, point of view, when resources are used efficiently the market for them reaches equilibrium.
We’ve answered 302,017 questions. We can answer yours, too.Ask a question