The Socially Optimal Level of Output of a Good That

question 145

Multiple Choice

The socially optimal level of output of a good that generates an externality occurs when:​

• A)the marginal private cost of production equal marginal private revenue.
• B)the firm maximizes its profits.
• C)the marginal private cost of production exceeds the marginal social cost of production.
• D)the marginal social cost of production equals the marginal social benefit of production.
• E)the marginal private cost of the good equals the marginal social benefit of the good.