Suppose That,in the Long Run,a Dairy's Variable Costs Are

question 25

Multiple Choice

Suppose that,in the long run,a dairy's variable costs are (where Q is the number of gallons of milk produced each day) ,its marginal cost is and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.What is the long run market supply curve?

• A) Vertical at 5 gallons per day
• B) Horizontal at $20 per gallon
• C) Horizontal at $50 per gallon
• D) Horizontal at $100 per gallon

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Definitions:

Small Number

A numerical value that is considered to be less than the expected or average size or amount.

Individual Producer

A single entity or person that creates goods or services to offer in a market.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of that good consumers are willing to purchase at various prices.

Market Power

The ability of a firm or group of firms to influence or control the terms and conditions of a market, including prices.