MGEA02H3 Lecture Notes - Lecture 5: Marginal Product
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The table presents the weekly demand and supply schedule for lawnmowers.
Market for Lawnmowers |
||
Price (dollars) |
Quantity of Lawnmowers Demanded |
Quantity of Lawnmowers Supplied |
$400 |
45 |
105 |
350 |
50 |
95 |
300 |
55 |
85 |
250 |
60 |
75 |
200 |
65 |
65 |
150 |
70 |
55 |
Assuming suppliers produce 75 lawnmowers per week:
1. this quantity is allocatively efficient because it will require producers to reduce the price of lawnmowers to sell all of the lawnmowers produced.
2. this quantity is allocatively efficient because the last lawnmower provides more benefits to consumers than alternative uses of the resources required to produce it.
3. this quantity is allocatively inefficient because the marginal cost of producing the last lawnmower is less than its marginal benefit to consumers.
4. this quantity is allocatively inefficient because the marginal cost of producing the last lawnmower exceeds its marginal benefit to consumers.