Figure 4-3 Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P₁ and a quantity of Q₁.Now suppose producers decide to cut output to Q₂in order to raise the price to P_2.
-Refer to Figure 4-3.At the price P₂,consumers are willing to buy the Q₂ pounds of granola.Is this an economically efficient quantity?

Question

Figure 4-3

Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P₁ and a quantity of Q₁.Now suppose producers decide to cut output to Q₂in order to raise the price to P_2.
-Refer to Figure 4-3.At the price P₂,consumers are willing to buy the Q₂ pounds of granola.Is this an economically efficient quantity?

Quizplus · Accepted Answer

At quantity Q2, if the marginal benefit exceeds the marginal cost, it indicates that consumers value the product more than it costs to produce, suggesting that more should be produced for efficiency.

Figure 4-3 Figure 4-3 Shows the Market for Granola