What are characteristics of an efficient market?

Answer 1

The main characteristics are: 1) Many buyers and sellers (lots of competition) 2) Firms want to maximize profits (uniform motives) 3) Ease of entry/exit into market (no restrictive quotas / taxes / laws) 4) Perfect information (instantaneous, accurate, complete) 5) Homogeneous product offerings Essentially the market is only ruled by consumers and suppliers (i.e. the supply and demand curves). Other non-market factors like governments and unions make the market less efficient, because they act on non-market-driven agendas.