The Market for Sweet Potatoes Consists of 1,000 Identical Firms

question 23

Multiple Choice

The market for sweet potatoes consists of 1,000 identical firms. The market demand curve is given by Q^d = 1000 - 5P. Each firm has a short-run total cost curve of STC = 100 + 100 q + 100q², and a short-run marginal cost curve of SMC=100+200q, where q is output. All fixed costs are sunk. In short-run market equilibrium, each individual firm will

• A) earn a short-run profit.
• B) earn a short-run loss.
• C) earn zero economic profit.
• D) produce an output of q = 4.

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