9.2 The Efficiency of a Competitive Market Economic efficiency-Maximization of aggregate consumer and producer surplus. Market failure-Situation in which an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers. Externality-Action taken by either a producer or a consumer which affects other producers or consumers but is not accounted for by the market price. 9.2 The Efficiency of a Competitive Market ❑ Economic efficiency-Maximization of aggregate consumer and producer surplus. ❑ Market failure-Situation in which an unregulated competitive market is inefficient because prices fail to provide proper signals to consumers and producers. ❑ Externality-Action taken by either a producer or a consumer which affects other producers or consumers but is not accounted for by the market price