**Is the competitive market efficient?
1.less than equilibrium quantity(underproducing): P1(s) Q1 P1(d)
P1(d) is the price that consumers are willing to pay for the goods or services,
higher than the market price(Pe)
P1(s) is the minimum price that producers want to produce..
the market is inefficient now.
The total surplus is smaller than the surplus when the quantity is the equilibrium
2.larger than the equilibrium quantity(overproducing)
The total surplus is also smaller than the surplus when the quantity is the
equilibrium quantity. The total surplus=consumer surplus+producer
It is a kind of wasting resources.
** Sources of market failure
1. Price and quantity regulations
Price regulations: minimum price->price floor