Question

If a government tries to completely maximize a benefit for society, what will happen to costs?
Responses, pick the best response


Marginal costs per unit of public good will vary with tax revenues.
Marginal costs per unit of public good will vary with tax revenues. - no response given

Marginal costs per unit of public good will make the program profitable.
Marginal costs per unit of public good will make the program profitable. - no response given

Marginal costs per unit of public good will decline.
Marginal costs per unit of public good will decline. - no response given

Marginal costs per unit of public good will rise dramatically.
Marginal costs per unit of public good will rise dramatically. - no response given

Answer 1

Marginal costs per unit of public good will rise dramatically.

Reason: as the government pushes toward maximizing total benefit, each additional unit yields less extra benefit (diminishing marginal benefit) while costs to produce those extra units typically rise, so marginal cost increases—often sharply—making the final increments very expensive.