Table 17-8.For a certain small town,the table shows the demand schedule for water.Assume the marginal cost of supplying water is constant at $4 per bottle.

-Refer to Table 17-8.If there were many suppliers of bottled water,what would be the price and quantity?

Question

Table 17-8.For a certain small town,the table shows the demand schedule for water.Assume the marginal cost of supplying water is constant at $4 per bottle.
 
-Refer to Table 17-8.If there were many suppliers of bottled water,what would be the price and quantity?

Quizplus · Accepted Answer

In a competitive market, price would equal marginal cost. Since marginal cost is constant at $4 per bottle, the price in the market would also be $4 per bottle. At this price, the quantity demanded would be 600 gallons as shown in the demand schedule. Therefore, the answer is C - the price would be $4 per gallon and the quantity would be 600 gallons.