Typically, if a well-intentioned social planner aims to maximize the combined benefits for both buyers and sellers in a market, what approach should they take?

Show Answers

Set a price lower than the market's equilibrium price.Let the market naturally reach its equilibrium without intervention.Select any price freely, since losses to one party are perfectly balanced by gains to the other.Impose a price higher than the market equilibrium.Fix prices based on external factors unrelated to market forces.

Explanation

The most efficient outcome that maximizes total benefits for buyers and sellers occurs when the market is allowed to find its own equilibrium price. Intervening by setting prices above or below this point typically reduces overall welfare.