Table 14-7
The widget industry has three types of firms. The cost structure for each type is as follows:

-Refer to Table 14-7.If this is a competitive market and it is in long-run equilibrium,what must the price be if all three types of firms are producing

Question

Table 14-7
The widget industry has three types of firms. The cost structure for each type is as follows:

-Refer to Table 14-7.If this is a competitive market and it is in long-run equilibrium,what must the price be if all three types of firms are producing

Quizplus · Accepted Answer

In a competitive market in long-run equilibrium, each firm will produce where price equals marginal cost. For type A firms, marginal cost is constant at $4, for type B firms, marginal cost is constant at $5, and for type C firms, marginal cost is constant at $6. Thus, the market price must also be $6 in order for all three types of firms to produce in the long-run equilibrium. Therefore, the best choice is C) $6.

Table 14-7 The Widget Industry Has Three Types of Firms. the Cost