Suppose there are 100 identical firms in the perfectly competitive notecard indu

Question

Suppose there are 100 identical firms in the perfectly competitive notecard industry. Each firm has a short- run total cost curve of the form: 9.3. STC+0.24+4q+10 300 and marginal cost is given by a. Calculate the firm's short-run supply curve with q (the number of crates of notecards) as a function of market price (P) b. Calculate the industry supply curve for the 100 firms in this industry Suppose market demand is given by Q--200P+8,000. What will be the shortrun equilibrium price -quantity combination? d. Suppose everyone starts writing more research papers and the new market demand is given by Q=-200P+11,200. what is the new short-run price-quantity equilibrium? How much profit does each firm make?

Explanation / Answer

In perfect competition,the marginal cost curve is the supply curve.

Supply=.1q^2+.4q+4.-supply of one firm

Industry supply=supply of one firm*total number of firms

Industry supply=10q^2+40q+400

Demand Q=-200P+11,200

P=11,200-Q/200

At equilibrium demand=supply

10q^2+40q+400=11,200-Q/200

Q=.73 or 8.73

P=55.97 or 55.95

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