Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?

Question

BlackTom AI · Accepted Answer

To evaluate which statement is true under the condition of a socially optimal quantity of a private good with no externality, we need to compare the relevant welfare conditions and what they imply about costs and benefits.
Option 1: 'Private benefits equal private costs.' This would be a condition for a specific market equilibrium if private marginal benefit (PMB) equaled private marginal cost (PMC). However, at the socially optimal quantity in the absence of externalities, the criterion is that social marginal benefit (SMB) equals social marginal cost (SMC), not merely private measures. Therefore, this statement is not the defining condition for social optimality when externalities are absent.
Option 2: 'Social marginal benefit equals private marginal cost.' This mixes concepts: the condition for social optimum is SMB = SMC. If there are no externalities, SMB equals private marginal benefit (PMB) and SMC equals PMC, but the precise requirement is SMB = SMC, which aligns with PMB = PMC only if SMB = PMB and SMC = PMC. In a no-externality setting, private and social marginal measures coincide, so SMB = SMC effectively corresponds to PMB = PMC. This option captures the core idea that welfare-maximizing quantity occurs where the benefit to society equals the cost to society, making it the true statement under the stated conditions.
Option 3: 'Consumer surplus equals producer surplus.' This equality is a property of certain market outcomes (often in a perfectly competitive equilibrium with identical margins on price), but it is not a defining condition for social optimality or for the presence of no externalities. It reflects distributional aspects rather than the efficiency condition SMB = SMC.
Option 4: 'Social marginal benefit exceeds social marginal cost.' When SMB > SMC, there would be additional welfare gains from increasing quantity, implying the current quantity is not socially optimal. Therefore, this statement contradicts the definition of the socially optimal point where SMB = SMC (assuming no externalities).
In summary, the key idea is that, without externalities, the social optimum is achieved where the society’s marginal benefit equals society’s marginal cost, and since private and social measures align in this case, the condition effectively reduces to the equality of SMB and SMC rather than a strict inequality.

Which of the following is TRUE when there is the socially optimal amount of a private good with no externality?单项选择题

类似问题

Assume the government implements a policy that causes a market to produce the socially optimal level of output. Which of the following must be true?

What is the socially optimal quantity?

Question at position 8 An excess of growth hormone (GH) before puberty can result in the development ofgigantism.Graves' disease.acromegaly.pituitary dwarfism.Clear my selection

Question at position 6 The most abundant supporting cells in the central nervous system are called Question Blank 1 of 1[input].

Question at position 5 In the eye, the lens functions tofocus light on the retina at the back of the eye.protect the surface of the eye.increase vision in low-light conditions.move the eye side to side.Clear my selection

Question at position 4 Olfactory (odor) receptors are chemoreceptors. TrueFalse

If the pKa of HCHO2 is 3.74 and the pH of an HCHO2/NaCHO2 solution is 3.00, which of the following is TRUE?

Identify the missing particle in the following nuclear equation: 92 236 𝑈 → 38 90 𝑆 𝑟 + ? + 2 0 1 𝑛 + 4 0 0 𝑔

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单