If the social cost is greater than the private cost in a particular market, the

Question

If the social cost is greater than the private cost in a particular market, the private equilibrium will be at a quantity:

greater than the socially optimal level.

equal to the socially optimal level.

less than the socially optimal level.

greater than or less than the socially optimum level, depending on the size of the external costs.

greater than the socially optimal level.

equal to the socially optimal level.

less than the socially optimal level.

greater than or less than the socially optimum level, depending on the size of the external costs.

Explanation / Answer

Answer
Option A
greater than the socially optimal level.
The Social cost is greater means the social equilibrium should be at lower output level because the social cost =marginal benefit (social equilibrium) intersects before the marginal cost=marginal benefit (private equilibrium)

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