Which statement is true?
A)A competitive market maximizes total surplus as all the gains from trade are realized.
B)In a competitive market all trade for which the MB is greater than or equal to the MC of production take place.
C)If output was increased beyond the traded in a competitive market total surplus would decrease
D)The competitive equilibrium outcome is Pareto efficient.
E)All of the above.

Question

Quizplus · Accepted Answer

All the statements are true regarding competitive markets. A) Competitive markets maximize total surplus by ensuring all gains from trade are realized. B) Trades occur in a competitive market when the marginal benefit (MB) is greater than or equal to the marginal cost (MC) of production, ensuring efficient allocation of resources. C) Increasing output beyond the equilibrium point in a competitive market would lead to a decrease in total surplus, as the cost of producing additional units would exceed the benefit derived from them. D) The competitive equilibrium outcome is Pareto efficient because it is impossible to make any one individual better off without making someone else worse off, indicating an optimal allocation of resources.

Which Statement Is True