Underproduction compared to the efficient amount implies that for the last unit produced,
A) marginal social benefit equals marginal social cost.
B) marginal social benefit exceeds marginal social cost.
C) marginal social cost exceeds marginal social benefit.
D) the deadweight loss is zero.

Question

Quizplus · Accepted Answer

Underproduction compared to the efficient amount implies that the value (or benefit) to society of an additional unit (marginal social benefit) is greater than the cost to society of producing it (marginal social cost), indicating that more of the good should be produced to reach efficiency.

Underproduction Compared to the Efficient Amount Implies That for the Last