There are four lighthouses on the island of Sand. If this is the efficient quantity of lighthouses,
A) the marginal social benefit of the fourth lighthouse equals its marginal social cost.
B) marginal social benefit minus marginal social cost is at a maximum.
C) total social benefit is zero.
D) Both answers A and C are correct.

Question

Quizplus · Accepted Answer

The efficient quantity of a good or service, such as lighthouses, is reached when the marginal social benefit (MSB) of the last unit produced equals its marginal social cost (MSC). This ensures that resources are allocated in a way that maximizes societal welfare.

There Are Four Lighthouses on the Island of Sand