If the price of product Y is $14 and its marginal cost is $18,
A)Y is being produced with the least-cost combination of resources.
B)society will realize a net gain if more of Y is produced.
C)resources are being overallocated to Y.
D)resources are being underallocated to Y.

Question

Quizplus · Accepted Answer

Since the marginal cost ($18) of producing product Y is higher than its price ($14), it indicates that the resources are being overallocated to Y. This means more resources are being used to produce Y than what is justified by the price consumers are willing to pay, leading to inefficiency.

If the Price of Product Y Is $14 and Its