At current output,the marginal social benefit from Furbys is greater than marginal social cost.To achieve an efficient allocation,which of the following must occur? (1)Furby output must increase.(2)Furby output must decrease.(3)the marginal social benefit of Furbys will rise.(4)the marginal social cost of Furbys will fall.
A)1 and 3
B)1 and 4
C)2 and 3
D)2 and 4
E)1 only

Question

Quizplus · Accepted Answer

When the marginal social benefit is greater than the marginal social cost, increasing output will move the allocation closer to efficiency, where marginal social benefit equals marginal social cost.

At Current Output,the Marginal Social Benefit from Furbys Is Greater