If the marginal cost of producing a public good is greater than society's total willingness to pay per unit, then
A) the optimal amount of the public good is being produced.
B) less than the optimal amount of the public good is being produced.
C) more than the optimal amount of the public good is being produced.
D) the amount of output being produced could be either greater than or less than the optimal amount.

Question

Quizplus · Accepted Answer

When the marginal cost of producing a public good exceeds society's total willingness to pay per unit, it indicates that resources are being overallocated to the production of that good, meaning more of the public good is being produced than is optimal.

If the Marginal Cost of Producing a Public Good Is