needed to produce the marginal good. In other words, the gains to society as a whole from producing

additional marginal units will be greater than the costs.

Conversely, consider what it would mean if, compared to the level of output at the allocatively efficient choice

when P = MC, firms produced a greater quantity of flowers. At a greater quantity, marginal costs of production

will have increased so that P < MC. In that case, the marginal costs of producing additional flowers is greater

than the benefit to society as measured by what people are willing to pay. For society as a whole, since the costs

are outstripping the benefits, it will make sense to produce a lower quantity of such goods.

When perfectly competitive firms maximize their profits by producing the quantity where P = MC, they also

assure that the benefits to consumers of what they are buying, as measured by the price they are willing to pay,
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