the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-3. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity? I A No, the marginal benefit of the last unit (Q2) exceeds the marginal cost of that last unit. B Yes, otherwise consumers would not buy Q2 units. Yes, because the price P2 shows what consumers are willing to pay for the product. No, the marginal cost of the last unit (Q2) exceeds the marginal benefit of the last unit.

the market for granola. The market is initially in equilibrium at a price of P1 and a quantity of Q1. Now suppose producers decide to cut output to Q2 in order to raise the price to P2. Refer to Figure 4-3. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity? I A No, the marginal benefit of the last unit (Q2) exceeds the marginal cost of that last unit. B Yes, otherwise consumers would not buy Q2 units. Yes, because the price P2 shows what consumers are willing to pay for the product. No, the marginal cost of the last unit (Q2) exceeds the marginal benefit of the last unit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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