When the Marginal Social Benefit of Good a Is Greater

question 9

Multiple Choice

When the marginal social benefit of Good A is greater than the marginal private benefit of Good A, then

• A) competitive, unregulated markets will produce the quantity of Good A that is equal to the efficient quantity.
• B) competitive, unregulated markets will produce a quantity of Good A that is greater than the efficient quantity.
• C) competitive, unregulated markets will produce a quantity of Good A that is less than the efficient quantity.
• D) the government should levy a tax on the production of Good A that is equal to the horizontal distance between the two marginal cost curves.

---

Definitions:

Service Revenue

Income earned by a company for the services it provides to its customers.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, often referred to as shareholders' equity.

Dividends

Funds disbursed by a corporation to its shareholders, often derived from the corporation's earnings.

Revenues

The income generated from normal business operations, typically from the sale of goods and services to customers.