Table 7-2
The only four producers in a market have the following costs:

-Refer to Table 7-2.If the sellers bid against each other for the right to sell the good to a single consumer,then the good will sell for
A) $30 or slightly more.
B) $40 or slightly less.
C) $55 or slightly less.
D) $65 or slightly less.

Question

Table 7-2
The only four producers in a market have the following costs:
 
-Refer to Table 7-2.If the sellers bid against each other for the right to sell the good to a single consumer,then the good will sell for
A) $30 or slightly more. 
B) $40 or slightly less. 
C) $55 or slightly less. 
D) $65 or slightly less.

Quizplus · Accepted Answer

In a competitive market, the price is determined by the intersection of the supply and demand curves. Here, the demand curve is a single consumer who will purchase only one unit of the good. The supply curve is formed by the individual producer's supply at each price level. The market supply curve is obtained by horizontally adding the individual supply curves. The market supply curve intersects the demand curve at a quantity of 1 and a price of $40. Therefore, the good will sell for $40 or slightly less.

Table 7-2 The Only Four Producers in a Market Have the Following