Figure 7-17
-Refer to Figure 7-17.If 4 units of the good are produced and sold,then

Question

Figure 7-17 
-Refer to Figure 7-17.If 4 units of the good are produced and sold,then

Quizplus · Accepted Answer

If only 4 units of the good are produced and sold, the demand exceeds the supply, resulting in a shortage. This means that some potential buyers will not be able to purchase the good at the prevailing market price, which is set above the equilibrium price (due to the limited supply). As a result, total surplus (i.e. the sum of consumer and producer surplus) will be lower than it could be under a more efficient allocation of resources. Therefore, the allocation of resources is inefficient in this scenario.

Figure 7-17 -Refer to Figure 7-17.If 4 Units of the Good Are