Economics 9708 · AS & A Level · 7.4

7.4 — practice question

The diagram illustrates the marginal social benefit (MSB) and marginal social cost (MSC) of a production process. What is the socially desirable level of output?

  • Aat 0 units because MSC is zero
  • Bbetween 0 and 10 units because MSB is greater than MSC
  • Cat 10 units because MSB equals MSC
  • Dat 20 units because MSB is exhausted

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