-The figure above shows the market for a good with an external benefit.The efficient level of production is ________ units because ________.
A) 8; marginal benefit equals marginal cost
B) 8; marginal cost is less than marginal social benefit
C) 10; marginal cost equals marginal social benefit
D) 10; marginal social benefit exceeds marginal benefit
E) 8; marginal benefit equals the marginal external benefit

Question

-The figure above shows the market for a good with an external benefit.The efficient level of production is ________ units because ________.
A) 8; marginal benefit equals marginal cost 
B) 8; marginal cost is less than marginal social benefit 
C) 10; marginal cost equals marginal social benefit 
D) 10; marginal social benefit exceeds marginal benefit 
E) 8; marginal benefit equals the marginal external benefit

Quizplus · Accepted Answer

The efficient level of production occurs where the marginal cost equals the marginal social benefit, which includes both the private benefit and any external benefits. This ensures that all costs and benefits to society are considered, not just those to the individual buyers and sellers.

-The Figure Above Shows the Market for a Good with an External