If a firm prices its output at marginal cost -- the competitive solution -- then

Question

If a firm prices its output at marginal cost -- the competitive solution -- then the gains from trade are (which of the following is correct:

   A. all in producer surplus.

   B. split between producer and consumer surplus.

   C. all in consumer surplus.

   D. split in a Nash solution.

If a firm prices its output at marginal cost -- the competitive solution -- then the gains from trade are (which of the following is correct:

   A. all in producer surplus.

   B. split between producer and consumer surplus.

   C. all in consumer surplus.

   D. split in a Nash solution.

Explanation / Answer

B. split between producer and consumer surplus.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.