This a table of the purely competitive string bean industry

This a table of the purely competitive string bean industry which consists of 100 identical firms Quantity Demanded Price Supplied Quantity S5800,000 700,000 600,000 500,000 400,000 $5 400,000 500,000 600,000 700,000 800,000 If each of the 100 firms in the industry is maximizing its profit, each must have a marginal cost af $5 $3. $2. O $4 O Type here to search

Solution

Correct answer is 3

When the price is $3, quantity demanded and quantity supplied are equal which indicates that this is the equilibrium price. At the equilibrium price marginal cost is equal to the price. Therefore all the profit-maximizing firms are experiencing a marginal cost of $3.