The condition P = MC implies that an individual who values the product at P will receive
A) positive consumer surplus.
B) no consumer surplus.
C) negative consumer surplus.
D) only producer surplus.

Question

Quizplus · Accepted Answer

When P = MC (Price equals Marginal Cost), it implies that the price the consumer pays is exactly equal to the cost of producing one more unit of the product. Therefore, the consumer is paying exactly what the product is worth at the margin, leading to no consumer surplus. Consumer surplus occurs when consumers pay less than what they are willing to pay, which is not the case here.

The Condition P = MC Implies That an Individual Who