Use the following to answer question:
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.If Joe owns one of many firms in a competitive industry,what price will he charge for a lunch in the long run?
A)$10
B)$8
C)$6
D)$4

Question

Use the following to answer question: 
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Suppose that the marginal cost and average cost of each lunch are a constant $4 for all firms in the market.If Joe owns one of many firms in a competitive industry,what price will he charge for a lunch in the long run?
A)$10 
B)$8 
C)$6 
D)$4

Quizplus · Accepted Answer

In a competitive market in the long run, firms will charge a price equal to their marginal cost (MC) and average cost (AC) if both are constant. Since the MC and AC are given as $4, Joe will charge $4 for a lunch.

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