If the social benefit is greater than the private benefit in a particular market, then the socially optimal equilibrium will exist at a quantity that is _______ the private level.
A)greater than
B)equal to
C)less than
D)either greater than or less than

Question

Quizplus · Accepted Answer

When the social benefit of a good or service exceeds the private benefit, it indicates that there are positive externalities associated with its consumption or production. To achieve the socially optimal equilibrium, where the marginal social benefit equals the marginal social cost, the quantity produced and consumed should be greater than the private level, where only private costs and benefits are considered. This adjustment accounts for the additional benefits to society that are not captured in the private market transactions.

If the Social Benefit Is Greater Than the Private Benefit