To maximize social welfare in the presence of a negative externality, marginal __________ must equal marginal __________.
A)social cost; private cost
B)private cost; social cost
C)social cost; social benefit
D)private cost; social benefit
E)social cost; external cost

Question

Quizplus · Accepted Answer

To maximize social welfare in the presence of a negative externality, marginal social cost must equal marginal social benefit. This ensures that the total costs to society, including external costs, are balanced with the benefits, leading to an efficient allocation of resources.

To Maximize Social Welfare in the Presence of a Negative