Suppose That for Each Firm in the Competitive Market for Potatoes,long-Run

question 14

Multiple Choice

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at $0.20 per pound when 500 pounds are grown.The demand for potatoes is Q = 10,000/p.If the long-run supply curve is horizontal,then how many firms will this industry sustain in the long run?

• A) 0
• B) 100
• C) 50,000
• D) There is not enough information to answer.

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Definitions:

Equilibrium Price

The cost where the amount of a product or service sought after matches the amount available, achieving equilibrium in the market.

Equilibrium Quantity

The measure of goods or services that are supplied and in demand at the price where supply equals demand.

Tradable Emission Permits

Environmental policy tools that allow companies to buy or sell allowances to emit a certain amount of pollutants, incentivizing pollution reduction.

Emissions

Emissions refer to the release of substances, often gases or particles, into the atmosphere, which can contribute to pollution and environmental change.