For a common resource,the marginal social benefit at the quantity provided by a private market is _____ the marginal social cost.

A) equal to
B) greater than
C) less than
D) irrelevant to

Question

For a common resource,the marginal social benefit at the quantity provided by a private market is _____ the marginal social cost.A) equal toB) greater thanC) less thanD) irrelevant to

Liusdany Dominguez · Accepted Answer

Final Answer : C, Explanation :  In a private market, the producers only consider their private costs and benefits while deciding the quantity to produce. They do not take into account the external costs or benefits imposed on society resulting from their production. This causes the marginal social cost to be greater than the marginal private cost, and the marginal social benefit to be less than the marginal private benefit. Hence, the correct answer is option C, i.e., the marginal social benefit at the quantity provided by a private market is less than the marginal social cost.

For a common resource,the marginal social benefit at the quantity provided by a private market is _____ the marginal social cost.

A) equal to
B) greater than
C) less than
D) irrelevant to

Definitions

Learning Objectives

Learning Objectives

Related questions