If all other industries were operating under perfect competition and there were no externalities, then the first- best policy for industry X would be to produce where

Question

Quizplus · Accepted Answer

In a perfectly competitive market without externalities, the first-best policy for any industry, including industry X, is to produce where Marginal Cost (MC) equals Price (P). This ensures allocative efficiency, where the price consumers are willing to pay matches the cost of producing an additional unit, leading to an optimal allocation of resources.

If All Other Industries Were Operating Under Perfect Competition and There