Question

Assignment Ch 11 Saved 4 Suppose that purely competitive firms producing cashews discover that Pexceeds MC a Is their combined output of cashews too little, too much, or just right to achieve allocative efficiency? rClck to select 20 b. In the long run, what will happen to the supply of cashews and the price of cashews? points Supply will Increase and the price of cashews will decrease O Supply will decrease and the price of cashews Will increase O Supply will increase and the price of cashews will increase eBook Supply will decrease and the price of cashews wil decrease Print C. Use a supply and demand diagram to show how that response will change the combined amount of consumer surplus and producer surplus in the market for cashews Raferances Instructions: Given the initial equilibrium price A and quantity Q. () use the shader tool provided Initiar to identify the initial surplus This will place a triangle on the graph. Click and drag the endpoints of the triangle to show consumer surplus and producer surplus at the onginal price and quantity (2) Click and drag the supply curve to show how the market reacts to the P> MC condition. (3) Use the shader tool provided 'Finar to identity the resulting consumer surplus and producer surplus al Final Quantity Mc Geaw

Answer 1

1.A competitive firm produces the efficienct level of output when P=MC=AC.When P>AC,the output produces is too little.

Answer-Too little.

2.New firms will enter the market in the long run, increasing supply and reducing price.

Answer-First option.

3.The market supply rises when new firms enter the market.

Price Q 01 Quantity