Resource use is efficient when production is such that marginal social benefit is
A) greater than marginal social cost.
B) equal to marginal social cost.
C) less than marginal social cost.
D) at its maximum value.

Question

Quizplus · Accepted Answer

Marginal social benefit is the additional benefit to society from producing one more unit of a good or service. Marginal social cost is the additional cost to society from producing one more unit of a good or service. Resource use is efficient when production is such that marginal social benefit is equal to marginal social cost. This is because at this point, the additional benefit to society from producing one more unit of a good or service is just equal to the additional cost to society from producing that unit.

Resource Use Is Efficient When Production Is Such That Marginal