A market produces too much of a good when the price of the good is:
A)greater than the marginal cost of providing it.
B)equal to the marginal cost of providing it.
C)less than the marginal cost of providing it.
D)equal to 1.

Question

Quizplus · Accepted Answer

When the price of a good is less than the marginal cost of providing it, it means that the supplier is not covering their costs and is losing money. In this scenario, if the market continues to produce more of the good, the suppliers will continue to incur losses. Therefore, producing too much of the good occurs when the price is less than the marginal cost.

A Market Produces Too Much of a Good When the Price