Figure: Efficient Market Outcome Reference: Ref 10-3 (Figure: Efficient Market Outcome) Refer to the figure. The efficient price and quantity are, respectively:
A) P1 and Q1.
B) P1 and Q2.
C) P2 and Q1.
D) P3 and Q2.

Question

Figure: Efficient Market Outcome  Reference: Ref 10-3 (Figure: Efficient Market Outcome) Refer to the figure. The efficient price and quantity are, respectively:
A) P1 and Q1. 
B) P1 and Q2. 
C) P2 and Q1. 
D) P3 and Q2.

Quizplus · Accepted Answer

The efficient price is where supply (S) equals demand (D), which occurs at P2. The efficient quantity is where the efficient price intersects the demand curve (D), which occurs at Q1. Therefore, the correct answer is C, P2 and Q1.