Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. In the long run, the equilibrium price will be ________ per gallon, and each firm's profit-maximizing quantity will be ________ gallons per week.
A)$20; 400
B)$15; 6,000
C)$15; 300
D)$20; 4,000

Question

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.  In the long run, the equilibrium price will be ________ per gallon, and each firm's profit-maximizing quantity will be ________ gallons per week.
A)$20; 400 
B)$15; 6,000 
C)$15; 300 
D)$20; 4,000

Quizplus · Accepted Answer

Each firm earns zero economic profit when the market price is $15. At this price, each firm will produce 300 gallons per week.

Assume That All Firms in This Industry Have Identical Cost