Which of the following is true for a market with no externalities under perfect

Question

Which of the following is true for a market with no externalities under perfect competition?

Market equilibrium gives the highest possible total surplus.

Market equilibrium gives the highest possible unit price.

Market equilibrium gives the highest possible total revenue.

Market equilibrium gives the highest possible producer surplus.

Market equilibrium gives the highest possible consumer surplus.

Market equilibrium gives the highest possible total surplus.

Market equilibrium gives the highest possible unit price.

Market equilibrium gives the highest possible total revenue.

Market equilibrium gives the highest possible producer surplus.

Market equilibrium gives the highest possible consumer surplus.

Explanation / Answer

The following option will be true for true for a market with no externalities under perfect competition:

Answer: Market equilibrium gives the highest possible total revenue

A perfect competition is one where in the aggregate demand is equal to the aggregate supply. Hence the producer will be able to get high revenues. This can also be supported by the following statement:

Option B: Market equilibrium gives the highest possible total revenue

The other given options do not aptly suit the given condition.

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