Asked by Sallye Ferguson on Jul 14, 2024
Verified
If there are no externalities, producing where price is greater than marginal cost is inefficient because for every unit produced, consumers derive benefits that are less than the cost of the resources needed to produce it.
Marginal Cost
The cost associated with producing one additional unit of output, focusing on how total production costs change with production volume adjustments.
- Understand the idea of externalities and how they affect the efficiency of market outcomes.
Verified Answer
SJ
shijie jiangJul 16, 2024
Final Answer :
False
Explanation :
Producing where price is greater than marginal cost is actually efficient up to the point where price equals marginal cost, because it indicates that consumers value the product more than the resources needed to produce it, leading to an efficient allocation of resources.
Learning Objectives
- Understand the idea of externalities and how they affect the efficiency of market outcomes.