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-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2 and no fixed cost.If the industry were actually perfectly competitive,the output would be _____ gadgets,and the price would be _____.
A)0;$10
B)500;$5
C)600;$4
D)800;$2

Question

Use the following to answer question: 
-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets at a marginal cost of $2 and no fixed cost.If the industry were actually perfectly competitive,the output would be _____ gadgets,and the price would be _____.
A)0;$10 
B)500;$5 
C)600;$4 
D)800;$2

Quizplus · Accepted Answer

In a perfectly competitive market, firms produce where price equals marginal cost. Given the marginal cost is $2, the output would be at the point where price equals marginal cost, which is $2. This results in the maximum output possible from the demand schedule provided.

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