Whether or not production is accompanied by an externality, a social planner who aims to maximize social surplus will always produce (assuming he does produce) where marginal social cost is equal to marginal social benefit.

Answer the following statement true (T) or false (F)


True

Rationale: Additional social surplus is produced by one more output so long as SMC lies below SMB.

Economics

You might also like to view...

Refer to the figure above. If A forms a customs union with B, it will import

A) 400 units from B. B) 200 units from C. C) 200 units from each. D) 400 units from B and 200 units from C.

Economics

Based on evidence from the turn of the century, the income elasticity of flour and meal

a. is greater than one. b. is less than one. c. approaches infinity. d. equals zero.

Economics

If a monopolist could sell 5 units at $6 and 6 units at $5: a. marginal revenue for the 6th unit is $5

b. marginal revenue for the 6th unit is zero. c. demand is unit elastic over that range of prices. d. both (b) and (c) are true.

Economics

When a country suffers from capital flight, the demand for loanable funds in that country shifts

a. right, which increases interest rates in that country. b. right, which decreases interest rates in that country. c. left, which increases interest rates in that country. d. left, which decreases interest rates in that country.

Economics