A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x, A)social cost = private cost = private value private value = social value private cost. C)social value = private value = private cost private value.

Question

A benevolent social planner would prefer that the output of good x be decreased from its current level if, at the current level of output of good x, A)social cost = private cost = private value < social value. B)social cost > private value = social value > private cost. C)social value = private value = private cost < social cost. D)social value = private cost = social cost > private value.

Quizplus · Accepted Answer

In option C, the social cost of producing good x exceeds all other values (private value, social value, and private cost), indicating that the production of good x imposes a greater cost on society than the benefits it provides. Reducing the output would align the production more closely with societal welfare by minimizing these excessive costs.

A Benevolent Social Planner Would Prefer That the Output of Good