If a market produces a level of output that exceeds the competitive equilibrium output,then
A) social welfare will be higher.
B) producer surplus will be higher.
C) marginal cost will exceed price.
D) All of the above.

Question

Quizplus · Accepted Answer

If the level of output exceeds the competitive equilibrium output, it means that the marginal cost of production is higher than the market price. This implies that resources are being allocated inefficiently and causing a deadweight loss. Thus, the answer is C, as the marginal cost will exceed the price. A and B are incorrect because social welfare and producer surplus are maximized at the competitive equilibrium output, not when it is exceeded.

If a Market Produces a Level of Output That Exceeds