Asked by
Andrea Singh
on Oct 26, 2024
Verified
(Figure: Marginal Private Benefits and Marginal Social Benefits) Use Figure: Marginal Private Benefits and Marginal Social Benefits.If government does intervene and encourages the market to produce and price at the socially optimal level,what will be the output and price?
A) Q0 and P0
B) Q1 and P0
C) Q1 and P2
D) Q2 and P1
Marginal Social Benefits
The additional benefits to society as a whole from producing one more unit of a good or service.
Socially Optimal Level
The level of output or activity where the benefits to society are maximized, taking into account both private and external costs and benefits.
Marginal Private Benefits
The additional satisfaction or utility gained by a consumer or firm from consuming or producing one more unit of a good.
- Interpret graphical representations of marginal private and social benefits and costs.
- Identify the role of government intervention in correcting market failures due to externalities.
Verified Answer
IV
Learning Objectives
- Interpret graphical representations of marginal private and social benefits and costs.
- Identify the role of government intervention in correcting market failures due to externalities.