What does market efficiency imply in an economic context?

Market efficiency refers to how well prices in a market reflect all available information about a good or service. When a market is efficient, it means that buyers and sellers are making decisions based on all the knowledge they have, so prices adjust quickly to reflect changes in supply and demand. For example, if a new technology is developed that makes a product cheaper to produce, the price of that product will likely drop quickly as companies and consumers react to this new information. This efficiency helps ensure that resources are allocated in the best possible way, which can lead to overall economic growth. In contrast, if a market is inefficient, it may lead to wasted resources or unfair prices, affecting everyone involved.