To maximize social welfare,which of the following must always be TRUE?
A) Marginal social benefit equals marginal social cost.
B) Marginal private benefit equals marginal social cost.
C) Marginal social benefit equals marginal private cost.
D) Marginal private benefit equals marginal private cost.

Question

Quizplus · Accepted Answer

When marginal social benefit equals marginal social cost, society is producing the optimal level of the good. At this level, the benefit society receives from producing an additional unit of the good is equal to the cost of producing that unit, ensuring that resources are allocated efficiently and maximizing social welfare. Choices B, C, and D do not necessarily lead to an optimal allocation of resources that maximizes social welfare.

To Maximize Social Welfare,which of the Following Must Always Be