To maximize society's welfare,the government should produce a public good up to the point at which the marginal social benefit _____ the marginal social cost.
A)equals
B)exceeds
C)is less than
D)is equal to or greater than

Question

Quizplus · Accepted Answer

Producing the public good up to the point where the marginal social benefit equals the marginal social cost ensures that society is getting the maximum benefit from the public good without incurring excessive costs. If the marginal social benefit exceeded the marginal social cost, the government could still increase production and thus welfare by producing more of the public good. Conversely, if the marginal social benefit were less than the marginal social cost, then producing the public good would actually reduce society's welfare. Therefore, producing the public good up to the point where the marginal social benefit equals the marginal social cost is the most efficient allocation of resources.

To Maximize Society's Welfare,the Government Should Produce a Public Good