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Figure: Marginal Private Benefits and Marginal Social Benefits
-(Figure: Marginal Private Benefits and Marginal Social Benefits) Use Figure: Marginal Private Benefits and Marginal Social Benefits.If government does intervene and encourage the market to produce and price at the socially optimal level,what will be the output and price?

Question

Use the following to answer questions :
Figure: Marginal Private Benefits and Marginal Social Benefits

-(Figure: Marginal Private Benefits and Marginal Social Benefits) Use Figure: Marginal Private Benefits and Marginal Social Benefits.If government does intervene and encourage the market to produce and price at the socially optimal level,what will be the output and price?

Quizplus · Accepted Answer

The socially optimal level occurs where marginal social benefit intersects with marginal social cost. In this figure, it occurs at Q₂ and P₁. Therefore, the government should intervene to encourage production and pricing at this level.

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