Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at 20¢ per pound when 500 pounds are grown.If the long-run supply curve is horizontal,then

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Since the long-run supply curve is horizontal, the price will be determined solely by the minimum average cost, which is 20¢ per pound. Therefore, the long-run price will be 20¢ per pound. Choices A and D are incorrect because firms in a competitive market earn zero economic profit in the long run. Choice C is irrelevant since it provides information about the quantity purchased by each consumer rather than the market price.

Suppose That for Each Firm in the Competitive Market for Potatoes,long-Run