Chapter 31.4, Problem 1ST

### Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

Chapter
Section

### Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

# If the MSC in Example 2 had been $580 instead of$360, what would the socially optimal, or efficient, outcome have been?

To determine

Calculate socially optimal or efficient outcome.

Explanation

The socially optimal or efficient outcome can be determined where the MSB (Marginal Social Benefits) is equal to MSC (Marginal Social Costs).

Table 1 shows MPB (Marginal Private Benefit) of various units of good Y.

Table 1

 Person MPB of First Unit of Y MPB of Second Unit of Y MPB of ThirdUnit of Y A 400 380 190 B 150 110 90 C 100 90 80

MSC for each unit is \$580...

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