The Socially Optimal Level of Output of a Good That

Multiple Choice

The socially optimal level of output of a good that generates an externality occurs when _____

A) the marginal private cost of production equals marginal private revenue.
B) the firm maximizes its profits.
C) the marginal private cost of production exceeds the marginal social cost of production.
D) the marginal social cost of production equals the marginal social benefit of production.
E) the marginal private cost of the good equals the marginal social benefit of the good.