Why is it considered "ideal" for price to just equal marginal cost?


When price equals marginal cost, the cost of manufacturing the marginal good just equals consumer desire for the good, as reflected by the market price. Consider the situation where price exceeds marginal cost. This implies that consumer desire for the product exceeds what it would cost the firm to produce one additional unit. From society's viewpoint (allocative efficiency), it would benefit from having the marginal good produced.

Economics

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What will be an ideal response?

Economics

Refer to Figure 13-4. Given the economy is at point A in year 1, what is the inflation rate between year 1 and year 2?

A) 0.9% B) 1.8% C) 2.7% D) 3.0%

Economics

If a large open economy, like the United States, reduces its budget deficit, what impact would this have on a small open economy?

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Economics

A person has a comparative advantage in the production of a good when they can produce the product at a(n) ________ opportunity cost compared to another person

Fill in the blank(s) with the appropriate word(s).

Economics