"If the marginal social benefit of a car exceeds the marginal social cost of a car, we are producing too many cars." True or false? Explain.

Question

Quizplus · Accepted Answer

If the marginal social benefit of a car exceeds the marginal social cost of a car, we can gain value by producing another car and we are losing value by not producing it. If the marginal social benefit exceeds the marginal social cost, producing another car yields a benefit that exceeds the cost of producing the car. So we are producing too few cars.

"If the Marginal Social Benefit of a Car Exceeds the Marginal