If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then ?
Correct answer: B. the cost of production on the last unit produced exceeds the value placed on it by buyers.
- A. the value placed on the last unit of production by buyers exceeds the cost of production
- B. the cost of production on the last unit produced exceeds the value placed on it by buyers.
- C. consumer surplus is maximized
- D. total surplus is maximized
- E. producer surplus is maximized
Explanation
Beyond equilibrium quantity, the cost of producing the next unit is greater than the value buyers place on it. Producing that unit would reduce total surplus.
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