The figure below shows the marginal benefit to consumers, MB, the marginal cost to private firms, MCp, and the marginal cost to society, MCs, at each level of output of some good. FIGURE 17- 1
-Refer to Figure 17- 1. The price that leads consumers to demand the socially optimal quantity of output is

Question

The figure below shows the marginal benefit to consumers, MB, the marginal cost to private firms, MCp, and the marginal cost to society, MCs, at each level of output of some good.  FIGURE 17- 1
-Refer to Figure 17- 1. The price that leads consumers to demand the socially optimal quantity of output is

Quizplus · Accepted Answer

The socially optimal quantity of output is where the marginal social benefit equals the marginal social cost. In Figure 17-1, this occurs at Q2, where the marginal social benefit curve (MSB) intersects the marginal social cost curve (MSC). The price that leads consumers to demand Q2 is P2.

The Figure Below Shows the Marginal Benefit to Consumers, MB