If a benevolent social planner chooses to produce less than the equilibrium quantity of a good, then
A) total surplus is maximized.
B) the value placed on the last unit of production by buyers exceeds the cost of production.
C) producer surplus is maximized.
D) the cost of production on the last unit produced exceeds the value placed on it by buyers.
E) consumer surplus is maximized.

Question

Quizplus · Accepted Answer

Producing less than the equilibrium quantity means that the value buyers place on the last unit exceeds the cost of production, indicating potential gains from increasing production.

If a Benevolent Social Planner Chooses to Produce Less Than