If society will gain by producing more X, then it must be the case that currently A) P_X = MC_X. B) P_X MC_X. C) P_X MC_X or P_X

Question

If society will gain by producing more X, then it must be the case that currently A) P_X = MC_X. B) P_X > MC_X. C) P_X < MC_X. D) either P_X > MC_X or P_X < MC_X.

Quizplus · Accepted Answer

For society to benefit from producing more of a good X, the marginal social benefit (MSB) of producing X must be greater than the marginal social cost (MSC) of producing X. This is because when MSB exceeds MSC, the additional benefits to society from producing one more unit of X outweigh the additional costs, indicating that increasing production would improve societal welfare.

If Society Will Gain by Producing More X, Then It