For an economist to say that too much of the good is produced, what must be true?
A)The consumer surplus plus the producer surplus must be smaller than it could be.
B)The consumer surplus must be smaller than optimal.
C)The consumer surplus must be larger than optimal.
D)The producer surplus must be smaller than optimal.

Question

Quizplus · Accepted Answer

When an economist says that too much of a good is produced, it implies that resources are being allocated inefficiently, leading to a situation where the combined consumer and producer surplus is smaller than it could be if resources were allocated optimally. This inefficiency typically results from overproduction, where the marginal cost of production exceeds the marginal benefit to consumers, leading to a net loss in total surplus.

For an Economist to Say That Too Much of the Good