Suppose that all firms in a given industry have the same supply curve given by Si(p) = 2p when p is greater than or equal to $2
and Si(p) = 0 when p is less than $2. Suppose that market demand is given by D(p) = 12 – p. If firms continue to enter the industry so long as they can do so profitably, the equilibrium price must be closest to
a.
$5.
b.
$4.
c.
$2.40.
d.
$2.
e.
$1.75.
a.
$5.
b.
$4.
c.
$2.40.
d.
$2.
e.
$1.75.
1 answer:
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