Consider a market with only one firm and total barriers to entry in which the demand curve is given by P = 100 – 2Q and MR = 100 – 4Q. Suppose that total costs is equal to 0 (hence, marginal cost is equal to 0). What would be the prevailing price in this market?

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 7CQ
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Consider a market with only one firm and total barriers to entry in which the demand curve is given by P = 100 – 2Q and MR = 100 – 4Q. Suppose that total costs is equal to 0 (hence, marginal cost is equal to 0). What would be the prevailing price in this market?

   

P = 20

   

P = 30

   

P = 50

   

P = 40

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