If the marginal benefit of a good exceeds its marginal cost
A) we should produce less to achieve the allocatively efficient use of resources.
B) weʹve achieved efficient resource use.
C) we should produce more to achieve the allocatively efficient use of resources.
D) we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources.

Question

Quizplus · Accepted Answer

If the marginal benefit of a good exceeds its marginal cost, it means that each additional unit produced is worth more than the cost of producing it. This indicates that there is unmet demand for the good and producing more would increase social welfare. Therefore, to achieve allocative efficiency, we should produce more of the good until the marginal benefit equals the marginal cost.

If the Marginal Benefit of a Good Exceeds Its Marginal