Optimal combination of goods can be determined in an economy that produces only two goods, with production of extra units of the two goods at a minimal marginal social cost. The consumption of the additional units of the two goods being produced will be benefitted by the consumers. This is known as marginal social benefit.

Step-by-step explanation:

Marginal social cost is the change in society's total cost brought about by the production of an additional unit of a good or service. It includes both marginal private cost and marginal external cost.

Marginal social benefit is the change in benefits associated with the consumption of an additional unit of a good or service. It is measured by the amount people are willing to pay for the additional unit of a good or service.

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3 years ago