If in a market the last unit of output was sold at a price higher than marginal cost,
A) producers are better off producing more.
B) consumers are better off if less of the product is sold.
C) social welfare is not maximized.
D) the unit increased total profit.

Question

Quizplus · Accepted Answer

When the last unit of output is sold at a price higher than marginal cost, it implies that the market is not allocatively efficient. This means that social welfare is not being maximized as the market is not producing the optimal level of output where marginal cost equals marginal benefit. Therefore, choice C is the best option.

If in a Market the Last Unit of Output Was