In a perfectly competitive market, the socially optimal quantity of output occurs when the marginal social cost equals the marginal private cost, regardless of externalities. True or False?

The statement is false. In a perfectly competitive market, the socially optimal quantity of output happens when the marginal social cost equals the marginal social benefit, not just the marginal private cost. Marginal social cost includes both the private cost of production and any external costs that affect society, such as pollution. For example, if a factory produces goods but also pollutes the air, the social cost of that production is higher than just the factory's costs. Therefore, to achieve social optimality, we must consider the broader impact on society, not just the private costs.