Why would it be economically inefficient for a firm to charge the price of a good greater than its marginal cost?
What will be an ideal response?
When price equals marginal cost, the marginal benefit to consumers equals the opportunity cost to society of producing one more unit of the good. This condition is efficient because it is impossible to increase the output of that good without lowering the value of the total output produced in the economy. If a firm charges a price greater than its marginal cost, then the firm is producing too little as people value additional units more than the cost to society of producing them.
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a. depends on the real rate of interest. b. depends on the level of employment. c. is equal to the Cambridge k. d. is stable in the short run.
There is no mechanism of collective choice that is always immune to misrepresentation of preferences by voters
Indicate whether the statement is true or false