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+--- Thread: In a competitive market, the output and price combination that maximizes social value is at the point where? (/thread-8059.html)
In a competitive market, the output and price combination that maximizes social value is at the point where? - Joe - 10-13-2012 04:00 AM
MR>MC.
MC=MR.
MC>MR.
total revenue is maximized.
- crwlnjeep - 10-13-2012 04:08 AM
MC = MR
At this point consumers get all they are willing to pay the cost of production for. And firms sell only products that the cost to produce is less than or equal to the price.
- simplicitus - 10-13-2012 04:08 AM
None of the above.
If you are looking at _social_ value, you have to consider externalities.
http://en.wikipedia.org/wiki/Externality
None of the possible answers do.
If and only if there are no externalities at all is the answer MR = MC. But in reality, there are always externalities.