Suppose a Negatively Sloped Demand Curve and a Positively Sloped

question 80

Multiple Choice

Suppose a negatively sloped demand curve and a positively sloped supply curve intersect at a price and quantity combination of $100 and 600 units of the good.But suppose that producers actually produce and sell 610 units.What can we correctly say about market efficiency in this case?

• A)The value placed on the final 10 units of the good by consumers exceeds the additional costs associated with their production - this market is not efficient.
• B)The production and consumption of the additional 10 units of the good increases total economic surplus and increases market efficiency.
• C)This market is efficient because economic surplus is maximized as production and consumption increase simultaneously.
• D)This market is not efficient because quantity demanded for the good exceeds quantity supplied.
• E)The value placed on the final 10 units of the good by consumers is less than the additional costs associated with their production - this market is not efficient.

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Definitions:

Kilograms

The base unit of mass in the International System of Units (SI), equivalent to 1000 grams.

Gram

A unit of measure for mass that is equal to 0.001 kilograms.

Milliliters

A measurement of capacity in the metric system, equal to 0.001 liters.

Ounce

A unit of weight in the US customary and British imperial systems, equal to 1/16 of a pound or approximately 28.35 grams.