Suppose that Sandy owns a farm in North Carolina and Pat owns a farm in Iowa, and Sandy's farm is generally more productive than Pat's. If both Sandy and Pat sell their corn in the same market, Sandy should produce the output at the marginal cost that is:
A) less than the marginal cost of Pat's production.
B) equal to the marginal cost of Pat's production.
C) greater than the marginal cost of Pat's production.
D) equal to total revenue in the market.

Question

Quizplus · Accepted Answer

In a competitive market, all producers should produce where their marginal cost equals the market price, which is the same for both Sandy and Pat. Thus, Sandy should produce at a marginal cost equal to Pat's.

Suppose That Sandy Owns a Farm in North Carolina and Pat