A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x,
A)social value = private value = private cost

Question

A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x,
A)social value = private value = private cost < social cost.
B)private cost < social cost = private value = social value.
C)social cost = private cost = private value < social value.
D)social cost = private cost = private value = social value.

Quizplus · Accepted Answer

At the current level of output of good x, if social value = private value = private cost < social cost, then the marginal social cost of producing good x exceeds the marginal social benefit. Therefore, a benevolent social planner would prefer that the output of good x be decreased from its current level.

A Benevolent Social Planner Would Prefer That the Output of Good