Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then
A) the principle of minimum differentiation means that production should be decreased.
B) the number of free riders is at its efficient amount.
C) less of the product should be produced because its provision exceeds the efficient level.
D) more of the product should be produced because its provision is less than the efficient level.

Question

Quizplus · Accepted Answer

When the marginal social benefit is less than the marginal social cost, it indicates overproduction, so less of the product should be produced to reach the efficient level.

Suppose That the Marginal Social Benefit from Another Unit of a Public