A market produces too much of a good when the price of the good is:
A)greater than the marginal social cost of providing it.
B)equal to the marginal social cost of providing it.
C)less than the marginal social cost of providing it.
D)equal to 1.

Question

Quizplus · Accepted Answer

When the price of the good is less than the marginal social cost of providing it, it implies that the price of the good is insufficient to cover the cost of its production, including its externalities. This leads to overproduction and results in a market producing too much of the good. Therefore, option C is the correct answer.

A Market Produces Too Much of a Good When the Price