Firms emerge when transaction costs of using the market are less than the cost of hierarchical control

The above figure shows the marginal social benefit, marginal private cost and marginal social cost of producing steel. If the market is competitive, what government policy might move the market closer to efficiency?

A) The government could subsidize the production of steel. B) The government could tax the production of steel. C) The government could issue vouchers to steel consumers. D) None of the above answers is correct.

Under what condition are profits maximized?

A) at the rate of output at which marginal revenue equals marginal cost B) at the output rate where marginal cost is greater than marginal revenue C) at the point at which the difference between total revenues and total costs is negative D) at the point at which the difference between price and quantity demanded is greatest