Exhibit 8.13

-Refer to Exhibit 8.13,which shows a perfectly competitive market.Social welfare is maximized at _____

Question

Exhibit 8.13
 
-Refer to Exhibit 8.13,which shows a perfectly competitive market.Social welfare is maximized at _____

Quizplus · Accepted Answer

At point e, social welfare is maximized as it represents the intersection of the supply and demand curves where the quantity supplied equals the quantity demanded and the equilibrium price is $6. At this point, consumer and producer surplus is maximized and there is no deadweight loss. Therefore, point e represents the socially optimal outcome in a perfectly competitive market.

Exhibit 8.13 -Refer to Exhibit 8.13,which Shows a Perfectly Competitive Market.Social Welfare