Question

c. a situation that occurs when one persons consumption of a unit of a good means no one else can consume it.
d. a situation in which the market fails to produce the efficient level of output.
e. the tendency for a common resource to be underused.
the author suggests the market for converting land to urban uses results in \inefficient land use allocation\ because
a. the marginal private cost of converting land to urban uses is equal to the marginal private benefit from consuming land converted to urban uses.
b. the marginal social benefit from consuming land converted to urban uses is greater than the marginal private benefit.
c. the marginal social cost of converting land to urban uses is greater than the marginal social benefit from consuming land converted to urban uses.
d. the marginal social cost of converting land to urban uses is greater than the marginal private cost.
e. the marginal private cost of converting land to urban uses is less than the marginal private benefit from consuming land converted to urban uses.

Explanation:

Market failure occurs when the market does not allocate resources efficiently. In the context of land use, if the marginal social cost (which includes all costs, such as environmental and community impacts) of converting land to urban uses is greater than the marginal social benefit (the overall benefit to society), it leads to inefficient land - use allocation. This is because society as a whole is worse off with the current level of land conversion.

• Option A: When marginal private cost equals marginal private benefit, it is a private - equilibrium condition, not necessarily a social - efficiency condition.
• Option B: If marginal social benefit is greater than marginal private benefit, it might suggest that more land conversion could be beneficial (if costs are considered properly), not inefficiency.
• Option D: The comparison between marginal social cost and marginal private cost alone does not fully explain inefficiency in land - use allocation. Inefficiency is determined by the relationship between social cost and social benefit.
• Option E: Similar to option A, a private - cost - benefit comparison (where marginal private cost is less than marginal private benefit) is a private - decision - making criterion, not a measure of social inefficiency.

Answer:

C. the marginal social cost of converting land to urban uses is greater than the marginal social benefit from consuming land converted to urban uses.