If in a market the last unit of output was sold at a price higher than marginal cost

Question

Quizplus · Accepted Answer

When the last unit is sold at a price higher than marginal cost, it indicates that the price is not equal to the true cost of production. This leads to a misallocation of resources as too much of the good is being produced and consumed, which reduces social welfare. Therefore, it is important for the market to set prices at the marginal cost to achieve efficiency and maximize social welfare.

If in a Market the Last Unit of Output Was