The figure above shows the supply and demand for pizza
a. What is the efficient level of output?
b. If 70,000 pizzas are produced, what area represents the deadweight loss?
c. Why does the deadweight loss in part (b) occur?
d. If 20,000 pizzas are produced, what area represents the deadweight loss?
e. Why does the deadweight loss in part (d) occur?
a. 40,000 pizzas is the efficient quantity.
b. If 70,000 pizzas are produced, the deadweight loss is area C.
c. The deadweight loss occurs because we are producing some pizzas, specifically pizzas 40,001 through 70,000, for which the marginal cost is greater than the marginal benefit.
d. If 20,000 pizzas are produced, the deadweight loss is area B.
e. The deadweight loss occurs because we are not producing some pizzas, namely pizzas 20,001 through 40,000, for which the marginal benefit is greater than the marginal cost.
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The equilibrium wage and quantity of labor in the market for skilled workers is determined by
A) the demand and supply of labor. B) the strength of labor unions. C) the market value created by the output of these skilled workers. D) the monopsony power of firms.
After the September 11, 2001 attacks on the World Trade Center, the supply of downtown office space in Manhattan was dramatically reduced. Forecasters predicted that the equilibrium price would rise, but in fact the price fell
What are some factors that could explain the fall in the equilibrium price, which the forecasters failed to take into account? A) Demand for office space fell due to quality-of-life concerns. B) The economic slowdown caused demand for office space to fall. C) both A and B D) none of the above