Socially Optimal Quantity
Socially optimal quantity is a term used in economics to describe the amount of a good or service that maximizes the benefit to society. It is the amount of a good or service that maximizes the net benefit to society, taking into account both the private and social costs and benefits associated with the production and consumption of the good or service. The socially optimal quantity is the amount of a good or service that maximizes the net benefit to society, taking into account both the private and social costs and benefits associated with the production and consumption of the good or service.
History of the Term
The concept of socially optimal quantity was first introduced by economist Arthur Cecil Pigou in his 1920 book The Economics of Welfare. Pigou argued that the socially optimal quantity of a good or service is the amount that maximizes the net benefit to society, taking into account both the private and social costs and benefits associated with the production and consumption of the good or service. Pigou’s work was later expanded upon by economist Kenneth Arrow, who developed the concept of the social optimum in his 1951 book Social Choice and Individual Values.
Comparisons
| Private Cost | Social Cost | Private Benefit | Social Benefit |
|---|---|---|---|
| $10 | $20 | $30 | $40 |
Summary
Socially optimal quantity is a term used in economics to describe the amount of a good or service that maximizes the benefit to society. It is the amount of a good or service that maximizes the net benefit to society, taking into account both the private and social costs and benefits associated with the production and consumption of the good or service. The concept of socially optimal quantity was first introduced by economist Arthur Cecil Pigou in his 1920 book The Economics of Welfare. For more information on this term, you can visit websites such as Investopedia, The Balance, and Economics Online.
See Also
- Marginal Cost
- Marginal Benefit
- Marginal Utility
- Marginal Social Cost
- Marginal Social Benefit
- Deadweight Loss
- Externalities
- Pareto Efficiency
- Social Cost-Benefit Analysis
- Opportunity Cost
