If the marginal utility of a product exceeds its MC, we would want, on efficiency grounds, to
A)increase production.
B)decrease production.
C)leave production constant.
D)One cannot tell without knowing the price.

Question

Quizplus · Accepted Answer

If the marginal utility of a product exceeds its marginal cost, it means that the additional satisfaction (utility) gained by producing one more unit is greater than the additional cost of producing that unit. This indicates that there is consumer demand for the product and that resources are being utilized efficiently. Therefore, increasing production would be the best choice to further satisfy consumer demand and improve efficiency.

If the Marginal Utility of a Product Exceeds Its MC