Figure 14-8
-Refer to Figure 14-8.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Question

Figure 14-8 
-Refer to Figure 14-8.To maximize total surplus,a benevolent social planner would choose which of the following outcomes?

Quizplus · Accepted Answer

The socially optimal outcome is where marginal cost equals marginal benefit. At this point, total surplus is maximized. In this case, the marginal cost is $15 and the marginal benefit is also $15. So the socially optimal outcome is 150 units of output and a price of $15 per unit.

Figure 14-8 -Refer to Figure 14-8.To Maximize Total Surplus,a Benevolent Social Planner