Table 14-3
The market for Whizzly Jigs consists of many identical firms, each with the cost structure below.Suppose the current market price is $2.
-Refer to table 14-3.Suppose the current market price is $2.What is the output of each individual firm?

Question

Table 14-3
The market for Whizzly Jigs consists of many identical firms, each with the cost structure below.Suppose the current market price is $2.  
-Refer to table 14-3.Suppose the current market price is $2.What is the output of each individual firm?

Quizplus · Accepted Answer

At a price of $2, each firm would produce the quantity where marginal cost equals price. In this case, the marginal cost is $1, which corresponds to a quantity of 3 units (see table 14-3). Therefore, the best choice would be for each firm to produce three units.

Table 14-3 The Market for Whizzly Jigs Consists of Many Identical Firms