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Economics (AS & A Level) · Feb / March 2023 · Paper 32 · Question 10

9708Efficiency and market failure

If the marginal cost of a good is lower than its price, allocative efficiency has not been achieved. What is likely to remedy this situation?

  1. Adecrease production of the good, decrease price of the good
  2. Bdecrease production of the good, increase price of the good
  3. Cincrease production of the good, decrease price of the good
  4. Dincrease production of the good, increase price of the good

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Correct answer: C. increase production of the good, decrease price of the good

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