A small nation has three gasoline suppliers with a linear monthly market demand equal to: Q = 500,000 - 5P. Each firm's marginal cost (MC)and average total cost (ATC)curves are horizontal at $10,000 per month.
-Refer to the information above. If the firms compete, what is the equilibrium price in the market?

Question

Quizplus · Accepted Answer

In a competitive market, the equilibrium price is set where the market demand equals the market supply. Given that each firm's MC and ATC are horizontal at $10,000, this suggests that the firms will produce up to the point where the price equals their marginal cost, which is $10,000. Therefore, the equilibrium price in the market would be $10,000.

A Small Nation Has Three Gasoline Suppliers with a Linear