If the market is producing where marginal social cost exceeds marginal social benefit, there will be a net loss to society.

Question

Quizplus · Accepted Answer

When marginal social cost exceeds marginal social benefit, it means that the production of a good or service is creating more costs than benefits for society as a whole. This results in a net loss to society, as the resources used to produce the good/service could have been put to better use elsewhere. As a result, the market outcome is inefficient and fails to maximize social welfare.

If the Market Is Producing Where Marginal Social Cost Exceeds