Figure 4-4

-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a quantity of 12,000 pounds,

Question

Figure 4-4
 
-Refer to Figure 4-4.The figure above represents the market for pecans.Assume that this is a competitive market.At a quantity of 12,000 pounds,

Quizplus · Accepted Answer

At a quantity of 12,000 pounds, the marginal cost of pecans is greater than the marginal benefit. This means that the additional cost of producing one more pound of pecans is higher than the additional benefit received from selling one more pound of pecans. Therefore, output is inefficiently high, and producers should decrease the quantity supplied. This can be achieved by either raising the price or decreasing the quantity supplied to reach the equilibrium point where marginal cost equals marginal benefit. However, in a competitive market, producers do not have much control over the price and must adjust their quantity supplied to meet the demand at the equilibrium price.

Figure 4-4 -Refer to Figure 4-4.The Figure Above Represents the Market for Represents