Assume that society places a higher value on the last unit of X produced than the value of the resources used to produce that unit. With no spillovers, this information means that
A)total cost is greater than total revenue.
B)price is greater than marginal cost.
C)marginal cost is greater than price.
D)resources are being overallocated to X.

Question

Quizplus · Accepted Answer

When society values the last unit of X more than the resources used to produce it, it means the price (reflecting society's valuation) is higher than the marginal cost (the cost of resources to produce that unit), indicating efficient allocation.

Assume That Society Places a Higher Value on the Last