Figure 15-7
THE EFFICIENT LEVEL OF
OUTPUT. A benevolent social
planner who wanted to maximize
total surplus in the market would
choose the level of output where
the demand curve and marginalcost
curve intersect. Below this
level, the value of the good to the
marginal buyer (as reflected in
the demand curve) exceeds the
marginal cost of making the
good. Above this level, the value
to the marginal buyer is less than
marginal cost.