When the marginal social benefit of Good A is greater than the marginal private benefit of Good A, then
A) competitive, unregulated markets will produce the quantity of Good A that is equal to the efficient quantity.
B) competitive, unregulated markets will produce a quantity of Good A that is greater than the efficient quantity.
C) competitive, unregulated markets will produce a quantity of Good A that is less than the efficient quantity.
D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves.

Question

Quizplus · Accepted Answer

When the marginal social benefit of a good is greater than the marginal private benefit, it indicates the presence of positive externalities. Competitive, unregulated markets, in this case, tend to produce less than the efficient quantity because they do not account for the external benefits to society.

When the Marginal Social Benefit of Good a Is Greater