Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Market equilibrium
B
Total cost
C
Social welfare maximization
D
Consumer surplus
Understanding the Answer
Let's break down why this is correct
Answer
Marginal analysis is a method used to evaluate the additional benefits and costs of a decision, helping to achieve allocative efficiency, which means resources are used where they are most valued. Similarly, social optimality refers to a situation where resources are distributed in a way that maximizes overall societal welfare. This can be understood as the point where the total benefits to society from a good or service equal the total costs of producing it. For example, if a community decides to build a park, social optimality occurs when the enjoyment and health benefits to the community from the park match the costs of building and maintaining it. In both cases, the goal is to ensure that resources are used effectively to benefit society as a whole.
Detailed Explanation
Social optimality means the best outcome for everyone in society. Other options are incorrect because Market equilibrium is when supply meets demand; Total cost is just the sum of all expenses.
Key Concepts
Marginal Analysis
Social Optimality
Allocative Efficiency
Topic
Marginal Analysis and Social Optimality
Difficulty
medium level question
Cognitive Level
understand
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