If society has overallocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Question

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If resources have been overallocated to a particular activity, it means that too much has been invested in it, resulting in diminishing returns. As a result, the additional benefits from the activity are less than the additional costs, making the marginal benefits less than the marginal costs.

If Society Has Overallocated Resources to a Particular Activity, Then