In a market,social surplus is maximized when consumers' willingness to pay for a good equals the ________.
A) marginal private cost of producing the good
B) average variable cost of producing the good
C) marginal social cost of producing the good
D) opportunity cost of producing the good

Question

Quizplus · Accepted Answer

Social surplus is maximized when the marginal social cost of producing a good equals consumers' willingness to pay. This is because the marginal social cost reflects both the private cost of producing the good and the external costs imposed on society, while consumers' willingness to pay reflects the value they place on the good. When these two values are equal, the market achieves its maximum social surplus. Therefore, (C) marginal social cost of producing the good is the correct choice.

In a Market,social Surplus Is Maximized When Consumers' Willingness to Pay