Suppose Juan values a slice of pizza at $1.50,but the pizza shop is unwilling to sell a slice of pizza for less than $2.00.These values imply that:
A) it is efficient for the shop to sell a slice of pizza to Juan for $1.50.
B) it is efficient for the shop to sell a slice of pizza Juan for $2.00.
C) the shop needs to produce more efficiently in order to lower the price.
D) it is not efficient for the shop to sell a slice of pizza to Juan.

Question

Quizplus · Accepted Answer

Since Juan values a slice of pizza at $1.50 but the shop is unwilling to sell for less than $2.00, there is no mutually beneficial transaction possible at these valuations. Thus, it is not efficient for the shop to sell a slice of pizza to Juan at these prices. Efficiency in economic terms occurs when both parties benefit from a transaction, which is not the case here due to the discrepancy in valuation and price.

Suppose Juan Values a Slice of Pizza at $1