Suppose the government is producing a public good.If the marginal benefit of the last unit of a public good produced is greater than the marginal cost of that unit,to achieve the efficient amount of production,what should be done?
A) The government should produce more units.
B) The government should cease production.
C) Private firms should take over the production and sale of the good.
D) Nothing, because the government is already producing the efficient quantity of the public good.
E) The government should produce fewer units.

Question

Quizplus · Accepted Answer

If the marginal benefit of the last unit of a public good produced is greater than the marginal cost of that unit, it means that there is still unmet demand for the good. Therefore, producing more units would increase societal welfare and achieve the efficient amount of production.

Suppose the Government Is Producing a Public Good