Welfare economics implies that the equilibrium price of a product is considered to be the best price because it
A)minimizes costs and maximizes output.
B)maximizes the combined welfare of buyers and sellers.
C)is not socially desirable.
D)minimizes the level of welfare payments.

Question

Quizplus · Accepted Answer

Welfare economics focuses on the optimal allocation of resources and goods to maximize the overall welfare of society. The equilibrium price, where supply equals demand, is considered the best price because it maximizes the combined welfare of buyers and sellers. Buyers pay a price they are willing to pay, and sellers sell at prices they are willing to accept, leading to an efficient market outcome where resources are allocated efficiently.

Welfare Economics Implies That the Equilibrium Price of a Product