When a computer firm is producing a level of output at which MC is greater than price,from society's standpoint the firm is producing too
A)Much because society is giving up more to produce additional computers than the computers are worth.
B)Much because society would be willing to give up more alternative goods in order to get additional computers.
C)Little because society is giving up more to produce additional computers than the computers are worth.
D)Little because society would be willing to give up more alternative goods in order to get additional computers.

Question

Quizplus · Accepted Answer

When the marginal cost (MC) is greater than the price, it indicates that the cost of producing an additional unit of output exceeds the revenue earned from selling that unit. Thus, the firm is using up scarce resources to produce goods that are not adding sufficient value to society. As a result, producing too much in this situation is inefficient and not socially optimal. Hence, option A is the correct answer.

When a Computer Firm Is Producing a Level of Output