AP Microeconomics Pol 2 B Explain Using Graphs Where Appropriate How Private Incentives Can Lead to Actions By Rational Agents That Are Socially Questions

Evaluate whether a policy improves social efficiency by comparing the marginal social gain from moving toward the optimal output with the intervention cost.

Exam points

compare the social-efficiency gain from correcting output with the cost of government intervention

[Maximum number: 1]

Figure for Question AP Microeconomics Pol 2 B Explain Using Graphs Where Appropriate How Private Incentives Can Lead to Actions By Rational Agents That Are Socially Questions question 1 — AP Microeconomics

The diagram provided illustrates the marginal pri vate benefit (MPB), marginal social benefit (MSB), marginal private cost (MPC), and marginal social cost (MSC) measured in dollars for a competitive market. Assume that the goal of the government is to in crease efficiency in the market. The cost of a govern ment intervention that increases market output from $Q_{1}$ to $Q_{2}$ is $\$ 1.2$ million. The intervention will defi nitely improve market efficiency if the area of

A is greater than $\$ 1.2$ million

B is less than $\$ 1.2$ million

C is less than $\$ 1.2$ million

A+B is greater than or equal to $\$ 1.2$ million

B+C is greater than or equal to $\$ 1.2$ million

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AP Microeconomics Pol 2 B Explain Using Graphs Where Appropriate How Private Incentives Can Lead to Actions By Rational Agents That Are Socially Questions question 1