Asked by Daniil Yagolnikov on Jul 08, 2024
Verified
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
A) maximizes both the total revenue for firms and the quantity supplied of the product.
B) maximizes the combined welfare of buyers and sellers.
C) minimizes costs and maximizes output.
D) minimizes the level of welfare payments.
Equilibrium Price
Equilibrium price is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.
Welfare Economics
A branch of economics that focuses on the optimal allocation of resources and goods and aims to evaluate the economic well-being of individuals and society.
- Comprehend the consequences of market equilibrium and disequilibrium on welfare.
Verified Answer
AS
Akash SharmaJul 10, 2024
Final Answer :
B
Explanation :
The equilibrium price is considered the best price in welfare economics because it maximizes the combined welfare of buyers and sellers, reflecting the most efficient allocation of resources where consumer surplus and producer surplus are optimized.
Learning Objectives
- Comprehend the consequences of market equilibrium and disequilibrium on welfare.