In order to maximize social welfare,a firm's production of a good should occur at the output where

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The social welfare is maximized when the social marginal cost (the cost to society of producing one more unit of the good) is equal to the social marginal benefit (the benefit to society of consuming one more unit of the good). This is because at this point, the combined welfare of society is maximized, since the additional cost of producing one more unit is exactly equal to the additional benefit of consuming one more unit.

In Order to Maximize Social Welfare,a Firm's Production of a Good