If the marginal benefit received from a good is greater than the marginal opportunity cost of production, then:
A) society's well-being can be improved if production decreases.
B) society's well-being cannot be improved by changing production.
C) the market is producing too much of the good.
D) the market is producing too little of the good.

Question

Quizplus · Accepted Answer

If the marginal benefit is greater than the marginal opportunity cost, it means that society values the good more than what it costs to produce. Therefore, producing more of the good would increase society's well-being. Since the market is currently producing at a level where the marginal benefit is greater than the marginal opportunity cost, it means that the market is producing too little of the good. Thus, increasing production would improve society's well-being.

If the Marginal Benefit Received from a Good Is Greater