Figure 4-4
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.At an output of 30,000 units

Question

Figure 4-4 
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.At an output of 30,000 units

Quizplus · Accepted Answer

At an output of 30,000 units, the marginal cost of producing iced tea is $4, while the marginal benefit to consumers is only $2. Therefore, output is inefficiently high as the cost of producing the iced tea is more than what consumers are willing to pay. To efficiently allocate resources, output should be reduced to the point where the marginal cost equals the marginal benefit.

Figure 4-4 -Refer to Figure 4-4.The Figure Above Represents the Market for the Market