Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The level of production that maximizes consumer and producer surplus
B
The output level where marginal cost equals marginal benefit
C
The quantity of goods produced in a perfectly competitive market
D
The output level determined by government regulations
Understanding the Answer
Let's break down why this is correct
Answer
Socially optimal output in economics refers to the level of production that benefits society as a whole, balancing the costs and benefits of goods and services. This means that the resources used to produce something should create the greatest overall happiness or welfare for everyone. To find this point, economists consider both the private costs to producers and the external costs or benefits to society, like pollution or community health. For example, if a factory produces shoes, the socially optimal output would be the number of shoes that not only satisfies demand but also minimizes negative effects like environmental damage. When actual output differs from this level, it can lead to issues like overproduction or underproduction, affecting the well-being of society.
Detailed Explanation
Socially optimal output happens when the cost to produce one more item is equal to the benefit people get from it. Other options are incorrect because Some might think maximizing consumer and producer surplus is the goal; People might believe that output in a perfect market is always optimal.
Key Concepts
socially optimal output
Topic
Socially Optimal Output vs. Actual Output
Difficulty
easy level question
Cognitive Level
understand
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