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-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for 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 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 questions: 
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for 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 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, the price equals the marginal cost. Since the marginal cost is $2, the price would be $2. The output would be where the price equals the marginal cost, which is 800 gadgets.

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