The efficient quantity of output of a product with external costs of production is
A) where the marginal social cost curve and marginal social benefit curve intersect.
B) zero.
C) where the demand curve and the producer's supply curve intersect.
D) as low as possible.

Question

Quizplus · Accepted Answer

The efficient quantity of output, considering external costs, is where the marginal social cost (MSC) curve intersects the marginal social benefit (MSB) curve. This point reflects the optimal allocation of resources by accounting for both the private costs/benefits and the external costs/benefits associated with production and consumption.

The Efficient Quantity of Output of a Product with External