-The table above shows the marginal social benefit of fishing in Mediterranean Sea.The marginal private cost of operating a fishing boat is the same for all producers,$300 per hour.The marginal social cost is twice the marginal private cost.With no government intervention,the market is
A) catching the efficient quantity of fish.
B) underproducing by 100 tons of fish.
C) underproducing by 300 tons of fish.
D) overproducing by 300 tons of fish.
E) overproducing by 200 tons of fish.

Question

-The table above shows the marginal social benefit of fishing in Mediterranean Sea.The marginal private cost of operating a fishing boat is the same for all producers,$300 per hour.The marginal social cost is twice the marginal private cost.With no government intervention,the market is
A) catching the efficient quantity of fish. 
B) underproducing by 100 tons of fish. 
C) underproducing by 300 tons of fish. 
D) overproducing by 300 tons of fish. 
E) overproducing by 200 tons of fish.

Quizplus · Accepted Answer

The marginal social cost (MSC) is twice the marginal private cost (MPC), making it $600 per hour. Without government intervention, producers will produce where marginal private cost equals marginal social benefit (MSB), ignoring the higher MSC. This leads to overproduction compared to the socially optimal level, where MSC equals MSB.

-The Table Above Shows the Marginal Social Benefit of Fishing