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-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what is deadweight loss in the long run?
A) $0
B) $4
C) $180
D) $360

Question

Use the following to answer questions: 
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what is deadweight loss in the long run?
A) $0 
B) $4 
C) $180 
D) $360

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce where price equals marginal cost, leading to no deadweight loss in the long run. Since Joe's marginal cost is constant and equal to the price, the deadweight loss is $0.

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