The Market Demand for Milk Is Additionally,suppose That a Dairy's

question 44

Multiple Choice

The market demand for milk is Additionally,suppose that 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.Suppose the demand for milk doubles.If in the short run the number of firms is fixed and their fixed costs are sunk,how much does each of the active firms produce in the short run equilibrium?

• A) 5
• B) 6
• C) 10
• D) 20

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