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?
A)This market is not efficient because quantity demanded for the good exceeds quantity supplied.
B)This market is efficient because economic surplus is maximized as production and consumption increase simultaneously.
C)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.
D)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.
E)The production and consumption of the additional 10 units of the good increases total economic surplus and increases market efficiency.

Question

Quizplus · Accepted Answer

When producers sell 610 units instead of the equilibrium 600 units, the value consumers place on the additional 10 units is less than the cost of producing them, leading to inefficiency.

Suppose a Negatively Sloped Demand Curve and a Positively Sloped