If the social cost of producing robots is less than the private cost of producing robots, the private market produces too few robots.

Question

Quizplus · Accepted Answer

When the social cost of producing a good is less than the private cost of producing that good, it means that there are external benefits associated with producing the good that are not reflected in the private cost. As a result, the private market will produce an amount that is less than the socially optimal level, leading to market failure. In the case of robots, if the social cost of producing robots (e.g. increased productivity, reduced labor costs, etc.) is less than the private cost of producing robots, then the private market will produce too few robots, as it does not take into account these external benefits.

If the Social Cost of Producing Robots Is Less Than