Refer to the figure below. At the private market equilibrium quantity, the marginal cost of the last unit produced is ______ the social marginal benefit of the last unit produced.
A)equal to
B)greater than
C)less than
D)more important than

Question

Refer to the figure below. At the private market equilibrium quantity, the marginal cost of the last unit produced is ______ the social marginal benefit of the last unit produced. 
A)equal to 
B)greater than 
C)less than 
D)more important than

Quizplus · Accepted Answer

At the private market equilibrium quantity, the marginal cost represents the cost to the producer, while the social marginal benefit accounts for the benefit to the society as a whole. Since the market only takes into account the private cost, and not the externalities or spillover effects on the society, the marginal cost is generally lower than the social marginal benefit, making choice C the correct answer.

Refer to the Figure Below