The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure.

-Refer to the figure above.What is the quantity supplied in the market when the market is perfectly competitive?

Question

The following figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms. Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure.
 
-Refer to the figure above.What is the quantity supplied in the market when the market is perfectly competitive?

Quizplus · Accepted Answer

When the market is perfectly competitive, the quantity supplied is found at the intersection of the market demand and market supply curves. From the graph, this occurs at a quantity of 60 units, represented by the point where the market demand curve intersects with the marginal cost curve. Therefore, the answer is (C) 60 units.

The Following Figure Shows the Market Demand Curve for Penicillin