Question

Exercice 4 (2 marks) The graphenefit and the 1. At each of The graph below represents the market for walnuts. Identify the values of marginal benefit and the marginal cost at the output levels of 2,000 pounds, 4 pounds and 6,000 pounds. At each of these output levels, state whether outp inefficiently high, inefficiently low, or economically efficient.

Answer 1

solution D output - 2000, Marginal Cost = 2150 Marginal Benefit = 3.50 Output - 4000, Marginal Marginal Cost = Benefit - 3.00 3.00 output= 6ooo, Marginal Cost = 3.50 Marginal Benefit = 2.50

- Marginal cost is the price corresponding to Supply Curve from quantity axis - Marginal Benefit is the price on the demand Curve corresponding to quantity on x-axis. - At output 2000, output is inefficiently low because at this output Marginal Benefit are higher than Marginal Cost. - At output 4000, output is economically efficient because Marginal benefits are equal to Marginal Cost OR Demand equals supply. - At output 6000 output is inefficiently high, because demand or Marginal benefits are lower than supply or Marginal Cost respectively.

Excercises - Point Price Summer - Point B Winter D. Apple D-Di s-si demand Supply Curve Curve in in Summer summer. in Point where A is equilibrium price is Pi and price point quantity is summer Qi D-D₂ demand during winter which is higher than D-Di dem and in summer) S-s, supply in winter (this also higher than summer supply) Point B is equilibrium point where Price is P2 which is lower than the summer price and Quantity Ca which is higher from Summer. Price in winter are lower only because with Increase in dem and Supply is increased more thon demand in winter,