If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased.

Question

Quizplus · Accepted Answer

When the marginal benefit of producing cars is greater than the marginal cost, increasing production moves the market closer to allocative efficiency, where the marginal benefit equals the marginal cost.

If Marginal Benefit Is Greater Than Marginal Cost for the Production