If the marginal social benefits of a good exceed its marginal social costs?
اگر کسی شے کے حاشیاتی سماجی فوائد اس کی حاشیاتی سماجی لاگت سے زیادہ ہوں تو کیا نتیجہ نکلتا ہے؟
- Then its private benefits must also exceed its private costs
- The government should subsidize its production
- The Pareto-optimal quantity of the good exceeds the equilibrium quantity
- None of these
Explanation
- When marginal social benefit (MSB) is greater than marginal social cost (MSC), society gains more from additional production.
- This indicates underproduction in the market due to positive externalities.
- The efficient (optimal) level of output should be higher than the current equilibrium.
- Thus, the Pareto-optimal quantity exceeds the equilibrium quantity.
Last verified on 23-04-2026
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