When the Marginal Social Benefit of Good a Is Greater

question 272

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 a quantity of Good A that is less than the efficient quantity.
• B) competitive, unregulated markets will produce the quantity of Good A that is equal to the efficient quantity.
• C) competitive, unregulated markets will produce a quantity of Good A that is greater 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.

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