In a free market,a firm's equilibrium output is determined _____
A)where marginal social cost equals marginal social benefit.
B)where marginal private benefit equals marginal social benefit.
C)where marginal social cost equals marginal private cost.
D)where marginal private cost equals marginal private benefit.
E)by government.

Question

Quizplus · Accepted Answer

In a free market, a firm's equilibrium output is determined where marginal private cost equals marginal private benefit. This is because a free market operates on the principles of self-interest and profit-maximization, where firms aim to produce the quantity of goods and services that maximizes their profits. As long as the marginal private cost of producing an additional unit of output is less than the marginal private benefit received from selling that unit, the firm will continue to produce and sell more units. The point at which these two values are equal represents the equilibrium output level for the firm in a free market.

In a Free Market,a Firm's Equilibrium Output Is Determined _____