The Production of Toilet Paper in a Perfectly Competitive Market

question 1

Multiple Choice

The production of toilet paper in a perfectly competitive market is characterized by the inverse supply curve (marginal cost curve) P = 4Q, where Q is measured in millions of 4-roll packs per month. The inverse demand for toilet paper is P = 10 - 6Q.
The market equilibrium price of toilet paper is ____ and the market equilibrium quantity is ____ million packs.

• A) 4; 1
• B) 1; 4
• C) 2; 2
• D) 3; 2

---

Definitions:

General-Obligation Bond

A type of municipal bond that is secured by the full faith and credit of the issuing government, including its taxing power to repay the bondholders.

Russell 2000

A gauge that tracks the performance of around 2000 of the smallest American firms listed in the Russell 3000 Index.

S&P 500

A stock market index tracking the performance of 500 of the largest companies listed on stock exchanges in the United States.

DJIA

Dow Jones Industrial Average, a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.