Figure 7-23

-Refer to Figure 7-23.Which of the following statements is correct?
A) The market is in equilibrium at Q1.
B) At Q2, the cost to sellers exceeds the value to buyers.
C) At Q4, the value to buyers is less than the cost to sellers.
D) At Q3, the market is producing too much output.

Question

Figure 7-23
 
-Refer to Figure 7-23.Which of the following statements is correct?
A) The market is in equilibrium at Q1. 
B) At Q2, the cost to sellers exceeds the value to buyers. 
C) At Q4, the value to buyers is less than the cost to sellers. 
D) At Q3, the market is producing too much output.

Quizplus · Accepted Answer

At Q4, the value to buyers is less than the cost to sellers, as the demand curve intersects with the supply curve below the equilibrium point. This means that the sellers are receiving a higher price than what the buyers are willing to pay, resulting in a surplus of goods. Option A is incorrect as Q1 is the point of equilibrium where the demand and supply curves intersect. Option B is incorrect as at Q2, the value to buyers exceeds the cost to sellers, resulting in a shortage of goods. Option D is incorrect as at Q3, the market is producing at the efficient output level where the demand and supply curves intersect.

Figure 7-23 -Refer to Figure 7-23.Which of the Following Statements Is Correct