Use the following to answer question:
Figure 8.3
-(Figure 8.3) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE?

Question

Use the following to answer question:
Figure 8.3 
-(Figure 8.3) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE?

Quizplus · Accepted Answer

Statement II, that the market equilibrium price is $2.50 per pound, is true based on the intersection of the supply and demand curves. Statement III, that there is free entry and exit for firms, is also true since there are no barriers to entry or exit in a perfectly competitive market. Statement I, that each firm produces at the point where marginal cost equals price, is not true since we cannot determine this from the graph alone.

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