Exhibit 8-1 The perfectly competitive firewood market is composed of 1, 000 identical consumers and 1, 000 identical firms.Exhibit 8-1 shows cost data for one firm and demand data for one consumer.What is the equilibrium price?

Question

Exhibit 8-1  The perfectly competitive firewood market is composed of 1, 000 identical consumers and 1, 000 identical firms.Exhibit 8-1 shows cost data for one firm and demand data for one consumer.What is the equilibrium price?

Quizplus · Accepted Answer

In a perfectly competitive market, the equilibrium price is determined where the market demand intersects with the market supply curve. In this case, the demand curve for one consumer intersects with the marginal cost curve for the firm at a price of $100. Therefore, the equilibrium price in this market is $100.

Exhibit 8-1 the Perfectly Competitive Firewood Market Is Composed