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Suppose That,in the Long Run,a Dairy's Variable Costs Are VC

Question 27

Multiple Choice

Suppose that,in the long run,a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day) ,its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day.In the long run there is free entry into the market.The long run market supply curve is:


A) vertical at 5 gallons per day.
B) horizontal at $20 per gallon.
C) horizontal at $50 per gallon.
D) horizontal at $100 per gallon.

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