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

question 35

Multiple Choice

Suppose that for each firm in the competitive market for potatoes,long-run average cost is minimized at 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 much will consumers spend,in total,on potatoes?

• A)$0
• B)$500
• C)$10,000
• D)$50,000

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Definitions:

Issuer

An entity that issues financial instruments, such as bonds, stocks, or other securities, to finance its operations.

Bond Indenture

A legal document outlining the terms and conditions between the bond issuer and the bondholders.

Market Rate

The prevailing rate at which goods, services, or securities are bought and sold in the market.

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.