If the marginal benefit of a good exceeds its marginal cost
A) we should produce more to achieve the allocatively efficient use of resources.
B) we've achieved efficient resource use.
C) we should produce less to achieve the allocatively efficient use of resources.
D) we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources.

Question

Quizplus · Accepted Answer

When the marginal benefit of a good exceeds its marginal cost, it means that the additional benefit of producing one more unit of the good is greater than the additional cost incurred to produce it. This implies that consumers are willing to pay more for the good than what it costs to produce it, indicating that there is unmet demand for the good. Therefore, producing more of the good would result in allocatively efficient resource use by satisfying consumer demand and maximizing social welfare.

If the Marginal Benefit of a Good Exceeds Its Marginal