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Figure: Model of a Competitive Market
-(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if there are no external benefits or costs, the output at Q will be:
A) larger than is socially desirable.
B) smaller than is socially desirable.
C) efficient.
D) inefficient.

Question

Use the following to answer questions:
Figure: Model of a Competitive Market 
-(Figure: Model of a Competitive Market) Given the figure Model of a Competitive Market, if there are no external benefits or costs, the output at Q will be:
A) larger than is socially desirable. 
B) smaller than is socially desirable. 
C) efficient. 
D) inefficient.

Quizplus · Accepted Answer

In a competitive market with no external benefits or costs, the output at Q is efficient because it reflects the equilibrium where supply equals demand, maximizing total welfare.

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