When Price Exceeds Marginal Cost

question 13

Multiple Choice

When price exceeds marginal cost

• A) the market structure is perfectly competitive.
• B) resources are optimally allocated from society's point of view.
• C) too much output is being produced, resulting in losses to businesses.
• D) a 1-unit increase in output increases the social value of output by more than the social costs of production.
• E) the costs of production are greater than the demand.

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Definitions:

Offeree

An individual or entity that receives a proposal or invitation to enter into an agreement.

Price

The amount of money expected, required, or given in payment for something.

Delivery

The process of transporting goods from one place to another or the act of transferring the possession of a legal instrument.

Valid Offer

A legally binding proposal made by one party to another to form a contract, requiring clear terms, intention, and communication.