Suppose the Market for Relay Switches Is Considered Perfectly Competitive

question 23

Multiple Choice

Suppose the market for relay switches is considered perfectly competitive and is in equilibrium at a price of $5,000 per pallet of relay switches. Callahan Relay produces relay switches at an average total cost given by ATC = and marginal cost given by MC = 2Q, where Q measures pallets of relay switches. If Callahan Relay maximizes profit, how much profit will it earn?

• A) $125,000
• B) $88,000
• C) $2.5 million
• D) $4.75 million

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