If output falls below equilibrium, marginal cost will be higher than the price.

Name: If output falls below equilibrium, marginal cost will be higher than the price.
Brand: Quizplus
Rating: 4.8 (47 reviews)

Question

Quizplus · Accepted Answer

When output falls below equilibrium, it typically means that there is less production than what the market demands at the equilibrium price, suggesting that marginal cost is lower than the price. Firms could increase production and still sell at a profitable margin until they reach equilibrium where marginal cost equals price.

If Output Falls Below Equilibrium, Marginal Cost Will Be Higher