The figure below shows a long-run industry supply curve (S_LR) and the demand cu

Question

The figure below shows a long-run industry supply curve (S_LR) and the demand curve (D) facing the competitive industry. The long-run marginal cost of producing the 20,000^th unit of output is S______. In long-run competitive equilibrium, the industry will produce________units of the good and sell these units at the market-clearing price of S_______per unit. The long-run marginal cost at the equilibrium output in pan c is S_______. and the long-run average cost at the equilibrium output is S______.

Explanation / Answer

a. $ 20 because under perfect competition, P = MC

b. 40,000 units; $ 30 as demand and supply curve intersect at this quantity and price so these are the equilibrium quantity and price of the commodity.

c. Under perfect competition, long run marginal cost = long run average cost = price = $ 30

Therefore, $ 30; $ 30

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