In the market for DVDs, 500,000 DVDs a month are available. The value people place on the 500,000th DVD a month is less than the marginal social cost of producing it. Resource use
A) would be more efficient if people would buy more DVDs.
B) is inefficient.
C) would be more efficient if firms would produce more DVDs.
D) is efficient.

Question

Quizplus · Accepted Answer

The value placed on the 500,000th DVD being less than its marginal social cost indicates that resources are being used to produce something valued less than its cost to society, suggesting inefficiency in resource use.

In the Market for DVDs, 500,000 DVDs a Month Are