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.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Theory Of Consumer Choice

Section: Chapter Questions

Problem 13PA

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