If 10 units of a good are sold at a market price of $40 each,then
A)the value to some individual of the tenth unit of output is $40
B)the economy is efficient
C)selling an 11th unit would be a Pareto improvement
D)a side payment of $40 is needed to ensure that the good is produced
E)the market must be perfectly competitive

Question

Quizplus · Accepted Answer

The value of the tenth unit to the buyer is $40, which is the market price. This does not imply that the economy is efficient, that selling an 11th unit would be a Pareto improvement, or that a side payment is needed to ensure that the good is produced. The market does not necessarily have to be perfectly competitive for this to hold true.

If 10 Units of a Good Are Sold at a Market