-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Geelong is
A) 5.
B) 15.
C) 10.
D) 0.
E) 20.

Question

-The figure above illustrates the marginal private cost and the marginal social cost to the city of Geelong for each rock concert that is offered. It also illustrates the marginal private benefit. There is no external benefit. The efficient number of concerts in Geelong is
A) 5. 
B) 15. 
C) 10. 
D) 0. 
E) 20.

Quizplus · Accepted Answer

The efficient number of concerts is determined where the marginal social cost (MSC) equals the marginal private benefit (MPB). This is because the efficient outcome occurs when the full cost to society (including any externalities) is taken into account and balanced against the benefits to society. Since there is no external benefit mentioned, we only consider the marginal private benefit and the marginal social cost. The point where these two curves intersect represents the socially optimal level of production or activity, which, based on the description, is at 10 concerts.

-The Figure Above Illustrates the Marginal Private Cost and the Marginal