Identify the truthfulness of the following statements.
I. The profit in a perfectly competitive market is the one that maximizes the economic benefits (the sum of consumer and producer surplus).
II. In a way, statement I represents the "invisible hand" of the marketplace that Adam Smith was discussing in his 1776 classic treatise sometimes referred to as "The Wealth of Nations."
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the profit-maximizing level of output also maximizes the sum of consumer and producer surplus, aligning with the concept of the "invisible hand" described by Adam Smith.

Identify the Truthfulness of the Following Statements