Use the table below to answer the following questions.
Table 16.2.2
Chemical Fertilizer Market

-Refer to Table 16.2.2. If the fertilizer market is perfectly competitive and unregulated, output (in tonnes)is
A)1.
B)2.
C)3.
D)4.
E)5.

Question

Use the table below to answer the following questions.
Table 16.2.2
Chemical Fertilizer Market
 
-Refer to Table 16.2.2. If the fertilizer market is perfectly competitive and unregulated, output (in tonnes)is
A)1. 
B)2. 
C)3. 
D)4. 
E)5.

Quizplus · Accepted Answer

The output level in a perfectly competitive market is where marginal cost (MC) equals marginal revenue (MR). In the table, at output level 4, MC is equal to MR at $380 per tonne. At any other output level, either MC is greater than MR, resulting in losses for firms, or MR is greater than MC, which means that firms can increase profit by producing more. Therefore, the equilibrium output level is 4 tonnes.

Use the Table Below to Answer the Following Questions