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Question 12 (1 point) Market demand is given as QD = 300 - 5P. Market supply is given as QS = 5P. Each identical firm has MC

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Answer #1

Ans: $20

Explanation:

QD = 300 - 5P

QS = 5P

At equilibrium , QD = QS

300 - 5P = 5P

10P = 300

P = 300 / 10 = 30 ( equilibrium price in the market)

Under perfect competition , at equilibrium ;

P = MC

30 = 6Q

Q = 30 / 6 = 5

Average Total Cost = 4Q = 4 * 5 = 20

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