If Social Marginal Benefit (SMB) Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC), it implies that:

Question

If Social Marginal Benefit (SMB) > Price (P) = Buyer's Private Marginal Benefit (MB) = Seller's Private Marginal Cost (MC) = Social Marginal Cost (SMC), it implies that:

Quizplus · Accepted Answer

When SMB > P = MB = MC = SMC, it implies that the social benefits of consuming an additional unit of the good exceed the private and social costs, suggesting that not enough of the good is being demanded to reach a socially optimal level.