Use the following to answer questions:
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what price will he charge for a lunch in the long run?
A) $10
B) $8
C) $6
D) $4

Question

Use the following to answer questions: 
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, what price will he charge for a lunch in the long run?
A) $10 
B) $8 
C) $6 
D) $4

Quizplus · Accepted Answer

In a competitive market, firms will charge a price equal to the marginal cost in the long run. Since the marginal cost is $4, Joe will charge $4 for each lunch.

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