Inputs go to those firms willing to pay the most for them, the firms who can sell their output for the greatest profit. So market prices for final goods indicate the most valued uses for inputs. If, in addition, we only consider goods which generate no harm in consumption and for which no pollution is generated as a byproduct, we can think of SMC as simply the marginal cost of production incurred by the firm.

In a market economy the equilibrium market price for any good or service indicates the value consumers place on the last unit of the good consumed. If we put aside concerns about labor market discrimination, monopsony, and income distribution, the market price is a reasonable measure of the Social Marginal Benefit of the last unit provided of any good or service.

So, by putting aside problems associated with harmful goods, pollution, discrimination, and inequality we can approximate SMB by market price and SMC by marginal cost of production.

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