If the marginal social benefit of a city's sewage system is less than the marginal social cost, then the city will achieve an efficient use of resources if it
A) increases the sewage charge that the residents pay.
B) increases the capacity of the sewage system.
C) does not change the capacity of the sewage system.
D) decreases the capacity of the sewage system.

Question

Quizplus · Accepted Answer

If the marginal social benefit is less than the marginal social cost, it means that the resources used for the sewage system could be better utilized elsewhere. Decreasing the capacity would reduce the costs and move towards a more efficient allocation of resources.

If the Marginal Social Benefit of a City's Sewage System