Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i) the socially-optimal level of output.
(ii) the market solution for profit-maximizing competitive firms.
(iii) the market solution for a profit-maximizing monopoly.
A)(i) and (ii)
B)(ii) and (iii)
C)(i) and (iii)
D)(i), (ii), and (iii)

Question

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with (i)	the socially-optimal level of output.
(ii)	the market solution for profit-maximizing competitive firms.
(iii)	the market solution for a profit-maximizing monopoly.
A)(i) and (ii)
B)(ii) and (iii)
C)(i) and (iii)
D)(i), (ii), and (iii)

Quizplus · Accepted Answer

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve implies that the price reflects the willingness of consumers to pay for the good and the cost of producing it. This is consistent with the socially-optimal level of output, as it means that the benefits consumers derive from the good are equal to the costs of producing it.
Moreover, this pricing strategy is also in line with the market solution for profit-maximizing competitive firms, which strive to sell at a price that maximizes their profits while responding to consumer demand.
Conversely, this pricing strategy is not consistent with the market solution for a profit-maximizing monopoly, as monopolies have market power and can raise prices above marginal cost to increase their profits.

Selling a Good at a Price Determined by the Intersection