If the price of a good does not take into account all of the relevant costs of its production, then the price of that good is too:
A) low, and the product will be overproduced.
B) high, and the product will be underproduced.
C) high, and the product will be overproduced.
D) low, and the product will be underproduced.

Question

Quizplus · Accepted Answer

When the price of a good does not include all relevant production costs, it is artificially low, leading to overproduction as producers do not bear the full cost of production.

If the Price of a Good Does Not Take into Account