If a government action is designed to achieve efficiency,then the action must have the market produce the amount of output so that the
A) marginal private cost equals the marginal private benefit.
B) marginal social cost equals the marginal social benefit.
C) marginal external cost equals the marginal external benefit.
D) marginal private cost equals the tax.
E) marginal social benefit exceeds the marginal social cost by as much as possible.

Question

Quizplus · Accepted Answer

Efficiency in government action requires achieving allocative efficiency, which occurs when marginal social cost equals marginal social benefit. This ensures that resources are allocated in a way that maximizes total societal welfare, taking into account both private and external costs and benefits. A is incorrect because it only considers private costs and benefits, while C only considers external costs and benefits. D is not a relevant factor in achieving efficiency, and E does not take into account the costs of producing the output.

If a Government Action Is Designed to Achieve Efficiency,then the Action