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.

Question

Quizplus · Accepted Answer

The equilibrium price is between the marginal buyer's willingness to pay and the marginal seller's cost. The equilibrium quantity is where the marginal buyer's willingness to pay equals the marginal seller's cost. 500 units is not an efficient quantity because the marginal buyer is willing to pay more than the marginal seller's cost.

Five Hundred Units of Good X Are Currently Bought and Sold.The