The diagram below shows the market demand curve and the cost curves for a single firm. FIGURE 12-6
-Refer to Figure 12-3. If the diagram depicts a perfectly competitive industry, the equilibrium price and quantity is
A) P3 and Q₁.
B) P1 and Q₁.
C) P1 and Q₂.
D) P2 and Q₁.
E) P2 and Q₂.

Question

The diagram below shows the market demand curve and the cost curves for a single firm.  FIGURE 12-6
-Refer to Figure 12-3. If the diagram depicts a perfectly competitive industry, the equilibrium price and quantity is
A) P3 and Q₁. 
B) P1 and Q₁. 
C) P1 and Q₂. 
D) P2 and Q₁. 
E) P2 and Q₂.

Quizplus · Accepted Answer

In a perfectly competitive industry, the equilibrium price and quantity occur where the supply and demand curves intersect. In the diagram, this intersection is at price P2 and quantity Q₂.

The Diagram Below Shows the Market Demand Curve and the Cost