Figure 4-4
-Refer to Figure 4-4.The figure above represents the market for iced tea.Assume that this is a competitive market.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

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.If the price of iced tea is $3,what changes in the market would result in an economically efficient output?

Quizplus · Accepted Answer

In an economically efficient output, the quantity demanded should be equal to the quantity supplied at the lowest possible price. At a price of $3 in the given market for iced tea, the quantity demanded is at 200 while the quantity supplied is at 50. To achieve an economically efficient output, the price of iced tea should decrease, leading to an increase in quantity demanded and a decrease in quantity supplied until both quantities are equal, resulting in a more efficient allocation of resources. Therefore, the best choice is D because it accurately describes the changes that would result in an economically efficient output.

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