Suppose the market demand for milk is Qd = 150 - 5P.Additionally,suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day) ,its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.What is the market equilibrium price?
A) $50 per gallon
B) $20 per gallon
C) $100 per gallon
D) $25 per gallon
Correct Answer:
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