Asked by Ariana Lisner on Jul 30, 2024
Verified
For production to be at the ________ level of output, marginal benefit must equal social cost.
A) profit-maximizing
B) loss-minimizing
C) shut-down
D) efficient
Efficient
The property of resource allocation where it is impossible to make any one individual better off without making at least one individual worse off.
Marginal Benefit
Marginal benefit is the additional satisfaction or utility that a consumer receives from consuming one more unit of a good or service.
Social Cost
The total cost to society, including both private costs borne by the producer and external costs borne by others, of producing a good or service.
- Recognize the impact of externalities on social costs, social benefits, and the efficiency level of production.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
D
Explanation :
For production to be at the efficient level of output, the marginal benefit (the additional benefit received from consuming one more unit of a good or service) must equal the social cost (the total cost society pays for the production of an extra item, including both the private cost and any external costs). This principle ensures that resources are allocated in a way that maximizes the overall benefit to society.
Learning Objectives
- Recognize the impact of externalities on social costs, social benefits, and the efficiency level of production.