Exhibit 7-1 -Refer to Exhibit 7-1. If Firm a Is Producing 5

question 119

Multiple Choice

Exhibit 7-1
-Refer to Exhibit 7-1. If Firm A is producing 5 units and Firm B is producing 3 units, then

• A)both firms should produce more because there is no way only 8 units could fulfill demand in a market.
• B)Firm A should produce more and Firm B should produce less.
• C)if Firm B reduced production by 1 unit, the savings would allow Firm A to produce 6 more units.
• D)if Firm A reduced production by 1 unit, the savings would allow Firm B to produce 2 more units.
• E)Pareto efficiency is achieved.

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