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Tema [17]
3 years ago
15

Five hundred units of good x are currently bought and sold. The marginal buyer is willing to pay $40 for the 500th unit, and the

cost to the marginal seller is $35 for the 500th unit. We know that:_______.a. the equilibrium price of good X is somewhere between $35 and $40.b. the equilibrium quantity of good X exceeds 500 units.c. 500 units is not an efficient quantity of good X.d. all of the above are correct.
Business
1 answer:
dimaraw [331]3 years ago
6 0

Answer:

D : All options are correct

Explanation:

- The marginal buyer is the essence of demand curve while marginal seller is essence of supply curve.

- @ Q = 500 units,    Selling Price is set at SP = $35

- @ Q = 500 units,    Buying Price is set at BP = $40

- Since, SP ≠ BP our equilibrium price would be $ 37.5 assuming the price elasticity of demand and supply are equal. In any case the equilibrium price would lie in between [ 35 , 40 ] such that to prevent a shortage of units in near future.

- Moreover, if the seller decides to sell at price $35 then he must sell goods greater than 500 units to reach the equilibrium profits. However, it could also lead to excess of units or surplus.

- We see that from selling the goods at SP = $35 while the buyer is willing to pay BP = $40 for 500 goods, the seller would be under-profiting and would be earning $5*500 = $2,500 less than he would at equilibrium price of $40 and selling units greater than 500. Hence, 500 goods is not an efficient quantity of goods.

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Answer:

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Answer:

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7 0
1 year ago
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