The Condition That Ensures That the Right Things Are Produced

Multiple Choice

The condition that ensures that the right things are produced is P = MC. This is true

A) only if price is set so that there is no consumer surplus and marginal cost is such that the firm's normal profit is zero.
B) only if price is set in a competitive market and marginal cost is a good measure of the actual costs paid by the firm.
C) only if price is a good measure of the value of the things that might otherwise be produced with the same resources and marginal cost is a good measure of the costs incurred by the firm in producing the good.
D) only if price is a good measure of the value that society places on a good, and only if marginal cost is a good measure of the value of the things that might otherwise be produced with the same resources.