Suppose That the Market for Gourmet Deli Sandwiches Is Perfectly

question 89

Multiple Choice

Suppose that the market for gourmet deli sandwiches is perfectly competitive and that the supply of workers in this industry is upward-sloping, so that wages increase as industry output increases. Delis in this market face the following total cost: where Q is the number of sandwiches and W is the daily wage paid to workers. The wage, which depends on total industry output, equals
, where N is the number of firms. Market demand is
) The long-run equilibrium output for each firm is ____.

• A) 7
• B) 6
• C) 5
• D) 4

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Definitions:

Marginal Cost

The financial outlay for manufacturing an additional unit of a product or service.

Average Cost

Average cost refers to the total cost of production divided by the total quantity produced, indicating the cost on a per-unit basis.

Natural Resources

Materials or substances occurring in nature which can be exploited for economic gain.

Monopolist's Pricing

The strategy used by a monopoly to determine the price of its product, often maximizing profits by controlling supply and determining demand.