Suppose that at current consumption levels, the marginal social cost of using the Los Angeles freeway system is $25 while the marginal social benefit is $15. In this instance, government officials should:

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In this instance, the marginal social cost of using the freeway system exceeds the marginal social benefit. This means that the negative externalities (such as congestion, pollution, and accidents) generated by the use of the freeway system outweigh the positive benefits. To achieve an efficient outcome, government officials should reduce the use of the freeway system by implementing measures such as congestion pricing, tolls, or incentives for carpooling, public transit, or telecommuting. Building more freeways would exacerbate the problem by inducing more demand and increasing the externalities.

Suppose That at Current Consumption Levels, the Marginal Social Cost