Figure 16-6

Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
-Refer to Figure 16-6.Suppose instead of charging the monopoly price for his classes, Sensei charges the competitive price.What is the competitive price and what is the quantity demanded at this price?
A)P₀, Q₁
B)P₀, Q₀
C)P₁, Q₀
D)P₁, Q₁

Question

Figure 16-6
  
Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
-Refer to Figure 16-6.Suppose instead of charging the monopoly price for his classes, Sensei charges the competitive price.What is the competitive price and what is the quantity demanded at this price?
A)P₀, Q₁ 
B)P₀, Q₀ 
C)P₁, Q₀ 
D)P₁, Q₁

Quizplus · Accepted Answer

The competitive price is where the demand curve intersects with the marginal cost curve, which is the same as the average cost curve in the long-run equilibrium. In this case, the competitive price is P₀ and the quantity demanded at this price is Q₀.

Figure 16-6 Watanabe Sensei Operates the Only Martial Arts School in Hartfield