When there is overproduction of a good,
A) the marginal beneﬁt of the good exceeds its marginal cost.
B) the marginal cost of the good exceeds its marginal beneﬁt.
C) the net beneﬁt of producing extra units of the good is positive.
D) allocative eﬃciency is enhanced.

Question

Quizplus · Accepted Answer

When there is overproduction of a good, it means that the marginal cost of producing an extra unit of the good exceeds its marginal benefit. Thus, producing more of the good results in a net loss of value and resources for society. Allocative efficiency is not enhanced in this scenario.

When There Is Overproduction of a Good