Suppose That the Perfectly Competitive Market for Granola Bars Is

Multiple Choice

Suppose that the perfectly competitive market for granola bars is made up of identical firms with long-run total cost functions given by TC(Q) = 8Q³ - 40Q² + 200Q. Assume that these cost functions are independent of the number of firms in the market and that firms may enter or exit the market freely. Market demand is Q^D = 8,000 - 3.5P, where price is in cents. The long-run equilibrium price is $____.

A) 2.00
B) 1.75
C) 1.50
D) 1.25