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Unformatted text preview: all producers internationally. 3. When does marginal social benefit equal marginal social cost and why? Marginal in this assumption would mean the cost or the benefit of producing one extra unit. If your marginal cost is higher than marginal benefit, then producing one extra unit would cause your profit to go down. If marginal benefit is higher than marginal cost, this means that if you produce one extra unit would cause your profit to go up. In other words, if your marginal benefit is higher, you should produce more to gain more profit. However, there will come a time MC would be greater than MB. So you should produce MB=MC which will give you the maximum possible profit. If either one is higher, you are not using your resources effectively....
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