9781118041581

QS(40)(6) 240 thousand units. With price greater than average

cost, each firm is making a positive economic profit. In the long run,

P ACmin$6, implying QD 400 (20)(6) 280 thousand units,

supplied by 280/5 56 firms.

5. If day care is free (P $0), the outcome will be inefficient: Too much day
   care will be demanded and consumed. The marginal benefit of the last
   hours consumed will be nearly zero, that is, much less than the hours’
   marginal cost, MB MC. (However, there may be beneficial
   distributional consequences.)

318 Chapter 7 Perfect Competition

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