Use the following to answer question:
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 encourages the market to produce and price at the socially optimal level,what will be the output and price?

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Use the following to answer question:
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 encourages the market to produce and price at the socially optimal level,what will be the output and price?

Quizplus · Accepted Answer

To produce at the socially optimal level, the output should be where marginal social benefit (MSB) equals marginal social cost (MSC), which is Q₂. The price should be at the point where this output intersects the demand curve, which is P₁. Therefore, the answer is D.

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