If marginal cost is found to be higher than marginal benefit, what should be concluded?

When marginal cost exceeds marginal benefit, it indicates that the additional cost of producing one more unit outweighs the additional benefit gained from that unit. In economic terms, resources are not being utilized effectively because the cost of producing additional units does not justify the returns they generate. Therefore, continuing to produce at this level would lead to inefficiencies and potential waste of resources.

This situation suggests that reallocating resources or reducing production could lead to a more efficient outcome, where the additional costs would align more closely with the benefits derived from production. A key principle in economics is that optimal production occurs where marginal cost equals marginal benefit; hence, if marginal cost is higher, it signals that the current production levels are not optimal and may be leading to waste.