If there is underproduction in a competitive market,________ _ .

Question

Quizplus · Accepted Answer

Underproduction in a competitive market means that the quantity produced is less than what would be socially efficient. This results in a situation where the marginal benefit (the extra benefit received from consuming one more unit) for society from consuming an additional unit exceeds the marginal cost (the cost of producing one more unit). Therefore, the correct answer is A) the marginal benefit to society exceeds the marginal cost.

If There Is Underproduction in a Competitive Market,________ _