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) is efficient.
B) is inefficient.
C) would be more efficient if people firms would produce more DVDs.
D) would be more efficient if people would buy more DVDs.

Question

Quizplus · Accepted Answer

Resource use is inefficient because the value placed on the 500,000th DVD is less than the marginal social cost of producing it, indicating overproduction and a misallocation of resources.

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