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Why do competitive markets maximise the sum of producer and consumer surplus?
12-14-2012, 07:11 AM
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Nick Offline

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Why do competitive markets maximise the sum of producer and consumer surplus?
And how would you use this analysis to explain what would happen if a social planner intervenes in a market in which supply and demand are determining equilibrium price and quantity.
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12-14-2012, 07:19 AM
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Anjaree Offline
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Only in the long run when price is equal to the minimum long run average total cost.
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