Question

The equilibrium price in the market for gluten-free muffins is $5, and at this price, 300 gluten-free muffins are bought and sold. At a quantity of 200 gluten-free muffins, the market is not efficient because:

Answer 1

The market for gluten-free muffins is said to be inefficient at a quantity of 200 because at this quantity, the quantity demanded does not equal the quantity supplied. In other words, there will either be a shortage or a surplus in the market.

Step-by-step explanation:

The market for gluten-free muffins is said to be inefficient at a quantity of 200 because at this quantity, the quantity demanded does not equal the quantity supplied. In other words, there will either be a shortage or a surplus in the market. Since the equilibrium price is $5 and 300 muffins are bought and sold at this price, a quantity of 200 will result in either excess demand (shortage) or excess supply (surplus).