An efficient quantity-price agreement is achieved by:
A) finding a point of tangency between buyer and seller profit contours.
B) supplying the maximum quantity that the buyer demands.
C) finding the buyer's value-maximizing quantity.
D) minimizing the supplier's average cost per unit.
E) finding a point where the seller's marginal cost is equal to zero.

Question

Quizplus · Accepted Answer

A point of tangency between buyer and seller profit contours represents a situation where both parties are maximizing their profits at the same quantity and price level. This means that there is no incentive for either party to deviate from the agreement, which results in an efficient outcome. The other choices may not necessarily lead to an efficient quantity-price agreement.

An Efficient Quantity-Price Agreement Is Achieved By