Suppose a negatively sloped demand curve and a positively sloped supply curve intersect at a price and quantity combination of $100 and 600 units of the good.But suppose that producers actually produce and sell 610 units.What can we correctly say about market efficiency in this case?
A)The value placed on the final 10 units of the good by consumers exceeds the additional costs associated with their production - this market is not efficient.
B)The production and consumption of the additional 10 units of the good increases total economic surplus and increases market efficiency.
C)This market is efficient because economic surplus is maximized as production and consumption increase simultaneously.
D)This market is not efficient because quantity demanded for the good exceeds quantity supplied.
E)The value placed on the final 10 units of the good by consumers is less than the additional costs associated with their production - this market is not efficient.

Question

Quizplus · Accepted Answer

The fact that producers are producing and selling more units than what the demand curve would dictate means that the last 10 units produced have a cost greater than the value that consumers place on them. This implies that resources are being wasted, and the market is not efficient.

Suppose a Negatively Sloped Demand Curve and a Positively Sloped