Refer to Figure 4-5. The figure above represents the market for pecans. Assume that this is a competitive market. At a quantity of 12,000 pounds
A) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high.
B) the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently high.
C) the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently low.
D) producers should lower the price to $3 in order to sell the quantity demanded of 12,000.
A
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If the income elasticity of demand for spaghetti is -1.3, then spaghetti
A) is a normal good. B) is an inferior good. C) has an elastic demand. D) is income elastic.
Refer to the above figure. If the market price is equal to A, which statement can be made about profits?
A) Profits are positive and equal to BCEA. B) Profits are positive and equal to BCFG. C) Profits are negative and equal to BCEA. D) Profits are negative and equal to GFQ 0.