Production by a monopoly would result in the socially optimal allocation of resources if
A)price is set equal to marginal cost
B)marginal revenue is set equal to price
C)marginal revenue is set equal to marginal cost
D)price is set equal to average total cost
E)marginal revenue is set equal to average total cost

Question

Quizplus · Accepted Answer

The socially optimal allocation of resources occurs when price equals marginal cost, as this ensures that the value consumers place on the last unit produced is equal to the cost of producing it, leading to an efficient allocation of resources.

Production by a Monopoly Would Result in the Socially Optimal