If at the current output of X the P_X MC_X, then society gains by A) producing more X. B) producing less X. C) raising the price of X. D) increasing the cost of producing X.

Question

If at the current output of X the P_X > MC_X, then society gains by A) producing more X. B) producing less X. C) raising the price of X. D) increasing the cost of producing X.

Quizplus · Accepted Answer

Producing more of X increases total surplus because the marginal private and social benefit (P_X) of producing one more unit of X is greater than the marginal cost (MC_X) of producing that unit, indicating that the value to society of one more unit of X exceeds the cost of producing it.

If at the Current Output of X the PX >

If at the Current Output of X the P_X >