The main difference between a socially optimum price and a fair-return price is that:
A) the marginal cost of the former is less than the cost of the latter.
B) the price of the former is less than the price latter.
C) the output of the former is less than the output of the latter.
D) the average total cost of the former is more than the average total cost of the latter.

Question

Quizplus · Accepted Answer

A socially optimum price is set where price equals marginal cost, often resulting in a lower price than a fair-return price, which is set to cover average total costs including a normal profit.

The Main Difference Between a Socially Optimum Price and a Fair-Return