Question

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.

Answer 1

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Explanation

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