For markets to operate efficiently, it is necessary that private marginal cost:
A) be equal to output quantity.
B) equal the cost of output.
C) plus external cost be equal to output price.
D) minus external cost be equal to output price.

Question

Quizplus · Accepted Answer

For markets to operate efficiently, it is necessary that the private marginal cost, when added to any external costs (costs not borne by the producer or consumer, but by third parties), equals the price of the output. This ensures that all costs, including those to society, are accounted for in the price of the product or service.

For Markets to Operate Efficiently, It Is Necessary That Private