Refer to Figure 4-3. At the equilibrium price of P1, consumers ...

[imanialler]

Refer to Figure 4-3. At the equilibrium price of P1, consumers are willing to buy Q1 pounds of granola. Is this an economically efficient quantity?
 
  A) Yes, because marginal cost is zero at the price of P1.
  B) No, the marginal cost of the last unit (Q1 ) exceeds the marginal benefit of the last unit.
  C) Yes, because P1 is the price where marginal benefit equals marginal cost.
  D) No, the marginal benefit of the last unit (Q1 ) exceeds the marginal cost of that last unit.

Question 2

What causes a production possibilities frontier to shift inward?
 
  What will be an ideal response?

[dyrone]

Answer to Question 1

C

Answer to Question 2

A production possibilities curve shifts inward with economic decline, or negative growth. This occurs with a decrease in resources or a negative technology change.

[imanialler]

Excellent

[JaynaD87]

Gracias!