1. What is social efficiency and how does it differ from narrow economic efficiency?

2. How do private costs differ from social costs, and why does this difference matter for market outcomes?

3. What are marginal social benefit and marginal social cost, and when does social efficiency occur?

1. What are externalities and how do they affect the decisions of producers and consumers?

2. How does a manufacturer's profit-maximizing choice at the point where MPC equals MPB differ from the socially efficient outcome?

3. Why do third parties bear costs or benefits from transactions they are not directly involved in?

1. What is productive inefficiency and under what market conditions does it most commonly occur?

2. How does allocative inefficiency affect consumer surplus and what market structures are most prone to it?

3. What is dynamic inefficiency and what are its consequences for consumers and innovation?

4. How does trade contribute to efficiency, and what does it mean for an economy to be Pareto efficient?

1. What is a rational agent and what process do rational agents use when making economic decisions?

2. How did Adam Smith's concept of the 'invisible hand' explain the relationship between self-interest and market outcomes?

3. Why might a rational decision for an individual firm not result in a socially efficient outcome?

1. What are the main ways governments intervene in markets to promote social efficiency?

2. How can government intervention address negative externalities and market structures that create inefficiency?

1. What are the costs of government intervention and how do these costs affect consumers and producers?

2. Why is government intervention to promote the public good often controversial, and how is the public good determined in the United States?