Refer to Figure 4-6. At the equilibrium price of P1, consumers are willing to buy Q1 pounds of granola. Is this an economically efficient quantity?
A) No, the marginal cost of the last unit (Q1 ) exceeds the marginal benefit of the last unit.
B) No, the marginal benefit of the last unit (Q1 ) exceeds the marginal cost of that last unit.
C) Yes, because P1 is the price where marginal benefit equals marginal cost.
D) Yes, because marginal cost is zero at the price of P1.
C
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a. True b. False Indicate whether the statement is true or false
What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery?
A) Demand will decrease, but this will not shift the supply curve. B) Supply will decrease, but this will not shift the demand curve. C) Demand and supply will both decrease. D) Demand will decrease and supply will increase.