According to Pigou,the socially optimal quantity A) is Q_O B) is Q_E C) eliminates area A+B+C+D. D) creates area E.

Question

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Pigou believed that the socially optimal quantity occurs where the marginal social benefit (MSB) equals marginal social cost (MSC). At this point, the quantity is Q_O, which is the intersection of the MSB and MSC curves. This quantity also eliminates the deadweight loss, which is the combined areas of A+B+C+D, making it the socially optimal choice.

According to Pigou,the Socially Optimal Quantity