The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B):

-Refer to the above graph to answer this question.Suppose that the market demand were to increase by 2,000 units.At the new equilibrium price in this market,what will be the representative firm's output?

Question

The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B):
 
-Refer to the above graph to answer this question.Suppose that the market demand were to increase by 2,000 units.At the new equilibrium price in this market,what will be the representative firm's output?

Quizplus · Accepted Answer

With an increase in market demand by 2,000 units, the new equilibrium quantity will be where the marginal cost (MC) curve intersects with the new market demand curve. From the graph, we can see that this intersection happens at a quantity of 40. Therefore, the representative firm's output at the new equilibrium will be 40 units. So, the correct answer is D) 40.

The Following Graph (A)represents the Cost Curves for a Representative