Government intervention in a particular industry is unnecessary if each of the industry's firms is operating where
A)there are no positive externalities.
B)there are no negative externalities.
C)price is equal to private marginal cost.
D)marginal social benefit is equal to marginal social cost.
E)the demand curve is perfectly elastic.

Question

Quizplus · Accepted Answer

Government intervention is unnecessary if the industry is operating at the socially optimal level, where marginal social benefit (MSB) is equal to marginal social cost (MSC). This is the level where resources are allocated efficiently and there is no market failure. Therefore, D is the correct choice, as it represents the condition where the industry is operating optimally without any need for government intervention. Options A, B, C, and E do not necessarily guarantee an optimal outcome without intervention.

Government Intervention in a Particular Industry Is Unnecessary If Each