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14 April, 13:10

A market produces too much of a good when the price of the good is: greater than the marginal social cost of providing it. equal to the marginal social cost of providing it. less than the marginal social cost of providing it. equal to 1.

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  1. 14 April, 13:24
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    less than the marginal social cost of providing it.

    Explanation:

    A market produces too much of a good when the price of the good is less than the marginal social cost of providing it.

    No consumer would willingly pay for an efficient quantity of a public good, because the marginal benefit to a consumer is less than the marginal social benefit.

    Also, If the marginal social benefit received from a good is less than the marginal social cost of production, then society's well-being can be improved if production decreases.
  2. 14 April, 15:08
    0
    less than the marginal social cost of providing it.

    Explanation:

    A market failure happens when the total output of a good or service is less than or more than the socially optimal quantity.

    Marginal social cost = marginal private cost + marginal external costs ( + or - )

    An over consumption of a good is a problem because negative externalities increase, hurting third parties, e. g. car pollution.

    In real life, a market is never able to achieve a socially optimal output, but coming close is generally good enough. When the price of a good or service is lower than the marginal social cost, then an over production and over consumption of the good will occur.

    The greatest problems happen when there is an over provision of demerit goods, or private goods or services that are over consumed generating negative externalities.

    The under production of merit goods is also a problem, since private goods that generate positive externalities aren't produced in enough quantities to satisfy the demand.
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