There are 100 firms in a perfectly competitive industry. Each firm has the short

Question

There are 100 firms in a perfectly competitive industry. Each firm has the short-run supply curve q = P - 2 for P > 2, and q = 0 for P The market supply curve for this industry is Q = P -200 for P > 200 and Q = 0 for P 200. Q = 100P -200 for P > 2 and Q = 0 for P 2. Q = 100P - 200 for P > 200 and Q = 0 for P 200. Q = 100P -2 for P > 2 and Q = 0 for P 2. If the market price is $9: the firms in the industry will supply a total of 700 units. (Enter your response as an integer.) Total producer surplus is $ (Enteryour response as an integer.)

Explanation / Answer

Market supply curve = 100 x individual supply curve

Q = 100P - 200 for P > 2

= 0 for P <= 2

When P = 9, Q = (100 x 9) - 200 = 700

If Q = 0, 100P = 200, so P = 2

This is the minimum price at which suppliers will sell.

So, producer surplus = (1/2) x (9 - 2) x 700 = 2,450

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