Welfare economics explains which of the following in the market for DVDs?
A) The government sets the price of DVDs; firms respond to the price by producing a specific level of output.
B) The government sets the quantity of DVDs; firms respond to the quantity by charging a specific price.
C) The market equilibrium price for DVDs maximizes the total welfare to DVD buyers and sellers.
D) The market equilibrium price for DVDs maximizes consumer welfare but minimizes producer welfare.
Correct Answer:
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