How many pounds of potatoes will be consumed in total if the long-run supply curve is horizontal?
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Suppose that for each firm in the competitive market for potatoes, long-run average cost is minimized at $0.20 per pound when 500 pounds are grown. The demand for potatoes is Q = 10,000/p.
The person above me states that the answer is 50,000 potatoes. This makes sense to me. The demand is expected to stay horizontal. This means that the demand has plateaued, and will stay the same, give or take a few pounds either way. Thinking long-term, the other answers simply don’t make sense. “Q” here means the demand of a certain good at the price given. If the demand at one point is 10,000 pounds, then why would it stay at 10,000 over time?
The same goes for 500 pounds; that’s the number of pounds needed to keep the price at $0.20 a pound. Finally: how in the world would zero pounds of potatoes make sense for a long-term demand?