Figure 4-3

Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40 in order to raise the price to $18.

Refer to Figure 4-3. At the equilibrium price of $15 consumers are willing to buy 80 pounds of tiger shrimp. Is this an economically efficient quantity?

Question

Figure 4-3

Figure 4-4 shows the market for tiger shrimp. The market is initially in equilibrium at a price of $15 and a quantity of 80. Now suppose producers decide to cut output to 40   in order to raise the price to $18.

Refer to Figure 4-3.  At the equilibrium price of $15 consumers are willing to buy 80   pounds of tiger shrimp. Is this an economically efficient quantity?

Answer

No, the marginal benefit of the 80th unit exceeds the marginal cost of the 80th unit.

Answer

Yes, because marginal cost is zero at the 80th unit.

Answer

No, the marginal cost of the 80th unit exceeds the marginal benefit of the 80th unit.

Answer

Yes, because $15 is the price where the marginal benefit is equal to the marginal cost.

Crowdly

Figure 4-3 Figure 4-4 shows the market for tiger shrimp. The market is ...

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