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.Suppose the demand for milk doubles.What is the new long-run equilibrium price?
A) $20 per unit
B) $40 per unit
C) $24 per unit
D) $2 per unit
Correct Answer:
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