The diagram below shows the private and social marginal costs (MC P and MC S )and the social marginal benefits (MB S )of producing disposable diapers. FIGURE 17-2
-Refer to Figure 17-2.The allocatively efficient level of production and use of disposable diapers is

Question

The diagram below shows the private and social marginal costs (MC P and MC S )and the social marginal benefits (MB S )of producing disposable diapers.  FIGURE 17-2
-Refer to Figure 17-2.The allocatively efficient level of production and use of disposable diapers is

Quizplus · Accepted Answer

The allocatively efficient level of production and use of disposable diapers is where the social marginal benefit (MB_S) is equal to the social marginal cost (MC_S), which occurs at Q₀. This ensures that the marginal social benefit of producing and using disposable diapers is equal to the marginal social cost, resulting in the greatest net benefit to society.

The Diagram Below Shows the Private and Social Marginal Costs