Distant ShoresDistant Shores has two natural springsnatural springs, one owned b
ID: 1146553 • Letter: D
Question
Distant ShoresDistant Shores has two natural springsnatural springs, one owned by DickDick and the other owned by HarryHarry. Each spring hasEach spring has a valve that controls the rate of flow of spring water.a valve that controls the rate of flow of spring water. The marginal cost of producing spring waterspring water is $00 a unit. The table gives the demand schedule for spring waterspring water in this areain this area. If DickDick and HarryHarry are forced to sell at the perfectly competitive price, what is the price of a unit of spring waterspring water? The perfectly competitive price of spring waterspring water is $ nothing a unit.
Explanation / Answer
In perfefct competition price is equal to marginal cost due to very large no. of sellers.
Therefore, P must be equal to $0. (Marginal Cost = $0)