Figure 15-1
-Figure 15-1 describes conditions in the monopolized weezil industry.If the government replaces the monopolist with perfectly competitive firms and forces these firms to take account of all the costs and benefits they impose on society, the industry will produce an output equal to

Question

Figure 15-1 
-Figure 15-1 describes conditions in the monopolized weezil industry.If the government replaces the monopolist with perfectly competitive firms and forces these firms to take account of all the costs and benefits they impose on society, the industry will produce an output equal to

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce where the price equals the marginal cost (P=MC), which corresponds to the socially optimal output level. This level is also where the marginal social benefit equals the marginal social cost (MSB=MSC), typically resulting in a higher output than under monopoly, where output is restricted to maximize profits. Therefore, without seeing Figure 15-1, the correct answer is the one that represents a higher output level than the monopolist's output but is determined by the intersection of MSB and MSC, which is typically described as the socially optimal output level.

Figure 15-1 -Figure 15-1 Describes Conditions in the Monopolized Weezil Industry.If the Weezil