Suppose a Perfectly Competitive Market Results in a Long-Run Equilibrium

question 46

Multiple Choice

Suppose a perfectly competitive market results in a long-run equilibrium price of $8 and quantity of 500.  If this same market were a monopoly, which of the following price and quantity combinations would be the most likely?

• A) Price: $10, Quantity: 350
• B) Price: $8, Quantity: 500
• C) Price: $6, Quantity: 650
• D) Price will equal marginal revenue and quantity will be found where marginal revenue equals marginal cost.

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Definitions:

Vertical Line Test

A method used to determine if a graph represents a function by checking if any vertical line crosses the graph more than once.

Function

A relationship between two sets that associates every element of the first set with exactly one element of the second set.

Vertical Line Test

A method used in determining if a graph represents a function, stating that if a vertical line intersects the graph more than once, then the graph is not a function.

Function

An interaction between a collection of inputs and a series of allowed outputs, where each input has a unique output association.