Author Question: Suppose a negatively sloped demand curve and a positively sloped supply curve intersect at a price ... (Read 20 times)

effaey · **on:** Oct 12, 2022

Suppose a negatively sloped demand curve and a positively sloped supply curve intersect at a price and quantity combination of $100 and 600 units of the good. But suppose that producers actually produce and sell 610 units. What can we correctly say about market efficiency in this case?
◦ The production and consumption of the additional 10 units of the good increases total economic surplus and increases market efficiency.
◦ The value placed on the final 10 units of the good by consumers exceeds the additional costs associated with their production - this market is not efficient.
◦ The value placed on the final 10 units of the good by consumers is less than the additional costs associated with their production - this market is not efficient.
◦ This market is not efficient because quantity demanded for the good exceeds quantity supplied.
◦ This market is efficient because economic surplus is maximized as production and consumption increase simultaneously.

nora9826 · **Reply #1 on:** Oct 12, 2022

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