Consider the following costs of a typical firm in a purely competitive industry. The firm has no fixed costs (average total cost = average
variable cost).
Quantity
1
2
3
4
5
6
Average Total
Cost
$10.00
9.50
9.00
9.25
12.60
22.00
Marginal Cost
$9.00
O $9.25
O $10.00
O $8.00
$9.00
8.00
10.00
26.00
69.00
a. Given only the information available, what would you expect product price to be in the long run?
