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 Q2 in order to raise the price to P2.
-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 Q2 in order to raise the price to P2.
-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 price P2, if consumers are willing to buy Q2 pounds, it suggests that the marginal benefit exceeds the marginal cost, indicating that it is not an economically efficient quantity.

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