Welfare economics explains which of the following in the market for televisions? a. The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. b. The government sets the price of televisions; firms respond to the price by producing a specific level of output. c. The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. d. The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.

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Business

Donavan Huang

18 February, 22:03

Welfare economics explains which of the following in the market for televisions? a. The government sets the quantity of televisions; firms respond to the quantity by charging a specific price. b. The government sets the price of televisions; firms respond to the price by producing a specific level of output. c. The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers. d. The market equilibrium price for televisions maximizes consumer welfare and minimizes producer profit.

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Hunter Fuller · Answer 1

c. The market equilibrium price for televisions maximizes the total welfare of television buyers and sellers.

Explanation:

Welfare economics by definition, is the study of how various allocation of resources affects economic well-being of buyers, seller and community at large. This study seeks to evaluate economic policies and determines their effects on the well-being of buyers and sellers. It assumes that an efficient allocation can be attained by a competitive equilibrium, given the market mechanisms that cause redistribution. However, the tools of welfare economics are not reliable when markets are inefficient.