If the MPC of production is less than the MSC,the market will produce too much of the product.

Question

Quizplus · Accepted Answer

When the MPC (Marginal Private Cost) of production is less than the MSC (Marginal Social Cost), it implies that the producers are not accounting for the full social cost of production (such as pollution, congestion, etc.). Hence, they are producing more than what is socially optimal, leading to overproduction.

If the MPC of Production Is Less Than the MSC,the