Answer to Question #165123 in Microeconomics for swetashreepanda88

Question

What is social optimum ? How is it determined?

Answer 1

The social optimum is the allocation chosen by a benevolent social planner who is constrained only by the endowment of resources. When output occurs at the intersection of marginal social benefit (MSB) and marginal social cost (MSC), the socially optimal level of output is achieved. Also known as the allocatively efficient level of output.