Question

When the size of the budget is less then optimum, then
A) MSS < MSB
B) MSS> MSB
C) MSS = MSB
D) NMB is zero

Answer 1

When the size of the budget is less then optimum

B)MSS>MSB

MSS stands for marginal social  sacrifice which means

• An upward sloping curve.
• Total sacrifice at per unit of taxation.
• Imposed due to addition of one extra unit of tax.
• Every individual should sacrifice equally while paying tax.

MSB stands for marginal social benefit which means

• Adding one extra unit of public expenditure
• A downward sloping curve.

Answer 2

Answer:

mss<msb..................