If society will gain by producing more X, then it must be the case that currently

Question

Quizplus · Accepted Answer

If society will gain by producing more of a good X, it means that the marginal benefit of producing an additional unit of X is greater than its marginal cost. Therefore, PX (price of X) must be greater than MCX (marginal cost of producing an additional unit of X). This is because if the price of X is less than its marginal cost, producers will not have an incentive to produce more of X, and hence, society cannot gain by producing more.

If Society Will Gain by Producing More X, Then It