Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the cost to the marginal seller is $35 for the 500th unit . We know that
A) the equilibrium price of good x is somewhere between $35 and $40.
B) the equilibrium quantity of good x exceeds 500 units.
C) 500 units is not an efficient quantity of good x.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

The marginal buyer's willingness to pay ($40) is higher than the marginal seller's cost ($35), indicating that the equilibrium price is between these values. Since the willingness to pay exceeds the cost, more units could be traded, suggesting the equilibrium quantity exceeds 500 units, and 500 units is not efficient.

Five Hundred Units of Good X Are Currently Bought and Sold