If the social benefit is greater than the private benefit in a particular market, the private equilibrium will exist at a quantity that is _______ the socially optimal level.
A)greater than
B)equal to
C)less than
D)either greater than or less than

Question

Quizplus · Accepted Answer

When the social benefit of a good or service exceeds the private benefit, the market tends to produce less than the socially optimal quantity. This is because private decision-makers do not account for the external benefits to society, leading to underproduction from a societal perspective.

If the Social Benefit Is Greater Than the Private Benefit