Question

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the (i) socially-optimal level of output. (ii) market solution for profit-maximizing competitive firms. (iii) market solution for a profit-maximizing monopoly.

Answer 1

Answer: i - Socially optimal level of output

Explanation: At the point of intersection of the demand curve and the marginal cost, any quantity below this quantity, the marginal benefit to consumers overshadows the marginal cost to the producers.