Selling a Good at a Price Determined by the Intersection

question 557

Multiple Choice

Selling a good at a price determined by the intersection of the demand curve and the marginal cost curve is consistent with the
(i) socially-optimal level of output.
(ii) market solution for profit-maximizing competitive firms.
(iii) market solution for a profit-maximizing monopoly.

• A)(i) and (ii) only
• B)(ii) and (iii) only
• C)(i) and (iii) only
• D)(i), (ii), and (iii)

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Definitions:

Nash Equilibrium

A concept in game theory where each player's strategy is optimal given the strategies of other players, and no player has anything to gain by changing only their own strategy.

Economic Profit

The difference between total revenue and the total opportunity costs (both explicit and implicit) of all resources used by a business.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, no matter what the other players do.

Natural Gas Fields

Geological formations containing natural gas, a fossil fuel consisting mainly of methane, that can be used for energy production.