Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then
A) the number of free riders is at its efficient amount.
B) less of the product should be produced because its provision exceeds the efficient level.
C) more of the product should be produced because its provision is less than the efficient level.
D) the principle of minimum differentiation means that production should be decreased.

Question

Quizplus · Accepted Answer

When the marginal social benefit of a public good is less than the marginal social cost of producing it, it indicates that the production exceeds the efficient level. Therefore, reducing production would align it more closely with the efficient level of provision.

Suppose That the Marginal Social Benefit from Another Unit of a Public