Figure 4-7
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1, what changes in the market would result in an economically efficient output?
A) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease.
B) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase.
C) The price would increase, the demand would increase, and the supply would decrease.
D) The price would increase, quantity demanded would increase, and quantity supplied would decrease.

Question

Figure 4-7 
-Refer to Figure 4-7. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is $1, what changes in the market would result in an economically efficient output?
A) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease. 
B) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase. 
C) The price would increase, the demand would increase, and the supply would decrease. 
D) The price would increase, quantity demanded would increase, and quantity supplied would decrease.

Quizplus · Accepted Answer

An economically efficient output occurs at the equilibrium price where quantity supplied equals quantity demanded. If the price is $1 and below equilibrium, the price would need to increase to reach equilibrium, causing quantity supplied to increase and quantity demanded to decrease.

Figure 4-7 -Refer to Figure 4-7. the Figure Above Represents the Market