In a perfectly competitive market, the long-run market price and output level are determined by the interaction of demand and supply. The market price will be equal to the minimum average cost of production, and the output level will be where marginal cost equals marginal revenue, which is also equal to the market price. For the office paper market, the correct answer is $40 for the market price and 80 cases for the output level.
In a perfectly competitive market, the long-run market price and output level are determined by the interaction of demand and supply in the market. In this case, the market for office paper is perfectly competitive. In the long run, firms can enter or exit the market, so the market price will be equal to the minimum average cost of production. This ensures that all firms in the market are earning normal profits.
From the given options, the correct answer would be $40 for the market price and 80 cases for the output level. This is because the market price will be equal to the minimum average cost, and the quantity produced will be at the level where marginal cost equals marginal revenue, which is also equal to the market price.