Which of the following statements is true?
A) At the efficient quantity, marginal social benefit equals marginal social cost.
B) Marginal social cost increases as the quantity produced decreases.
C) Marginal social benefit decreases as the quantity consumed decreases.
D) If marginal social benefit exceeds marginal social cost by as much as possible, production is efficient.

Question

Quizplus · Accepted Answer

At the efficient quantity, marginal social benefit (MSB) equals marginal social cost (MSC), meaning that society is getting the most benefit from producing that particular quantity without experiencing any additional costs. Option B is incorrect because marginal social cost generally increases as the quantity produced increases, not decreases. Option C is incorrect because marginal social benefit generally decreases as the quantity consumed or produced increases, not decreases. Option D is incorrect because maximum possible difference between marginal social benefit and marginal social cost does not ensure efficient production; instead, MSB and MSC need to be equal for efficient production.

Which of the Following Statements Is True