If MU = MC = P, an economist can judge with certainty that the distribution of output is
A)fair.
B)equal.
C)unbiased.
D)efficient.

Question

Quizplus · Accepted Answer

When MU (marginal utility) = MC (marginal cost) = P (price), the distribution of output is efficient. This means that the production is taking place at the point where the marginal benefit (MU) of each unit produced is equal to its marginal cost (MC), which is the socially optimal level of production. Therefore, there is no waste of resources, and the output is distributed in an efficient manner.

If MU = MC = P, an Economist Can Judge