The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units.

-Refer to the table above.If this market were perfectly competitive,the long-run equilibrium price would be ________.

Question

The table below summarizes the information possessed by a firm in a monopolistically competitive market. Quantity demanded is in thousands of units.
 
-Refer to the table above.If this market were perfectly competitive,the long-run equilibrium price would be ________.

Quizplus · Accepted Answer

In a perfectly competitive market, price is equal to marginal cost in the long run. In this case, the firm's marginal cost is $2.50 at the profit-maximizing quantity of 7 thousand units. Therefore, if the market were perfectly competitive, the price would be $2.50. The closest option to this is option B) $2.70, which would likely occur due to pricing competition among perfectly competitive firms.

The Table Below Summarizes the Information Possessed by a Firm