Assuming there are no externalities, if a firm produces an output level where the benefits to consumers ________ the cost to suppliers to produce it, then price is ________ marginal cost.
A) are less than; greater than
B) exceed; greater than
C) exceed; less than
D) equal; less than

Question

Quizplus · Accepted Answer

When the benefits to consumers exceed the cost to suppliers to produce it, it implies that the price consumers are willing to pay is higher than the cost of production, hence price is greater than marginal cost.

Assuming There Are No Externalities, If a Firm Produces an Output