Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increased consumer surplus and decreased deadweight loss
B
A surplus of goods leading to inefficiencies
C
Marginal costs exceeding marginal benefits
D
Optimal resource allocation within the market
Understanding the Answer
Let's break down why this is correct
Answer
When the actual output in a market exceeds the socially optimal output, it usually leads to overproduction. This means that more goods are being made than what is ideal for society, which can result in wasted resources and environmental damage. For example, if a factory produces too many toys, not only might some toys go unsold, but the materials and energy used to make them could have been better used elsewhere. Overproduction can also lower prices, harming businesses and workers in the long run. Therefore, achieving a balance between actual output and socially optimal output is important for a healthy economy.
Detailed Explanation
When production is too high, the cost to make one more item is greater than the benefit people get from it. Other options are incorrect because Some might think more goods always help consumers; It's easy to think a surplus means everything is fine.
Key Concepts
Socially Optimal Output
Actual Output
Market Efficiency
Topic
Socially Optimal Output vs. Actual Output
Difficulty
medium level question
Cognitive Level
understand
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