Question

5. Use the same information as in problem 4. a. Derive the firm's short-run supply curve. b. If 100 identical firms are in the market, what is the industry supply curve?

Answer 1

Given that In the short-son, a firm will not supply at a price below its minimum average variable cost. Thus, in the short-run, firm's shoot-run supply curve of a firm considy with that portion of the short-run marginal cost cone which lies above the minimum point of the short-run average variable cost (SAVC) carve. Average Marginal cost variable cost 50 50 28 39 ao 33 14 28 e variable cost Lo60 100 1 60 150 50 12 60 178 78 198 98 212 15 60 230 16 60 950 1 150 7 60 272 1 172 18 60 310 alo 19 60 355 255 I 10 Go | 410 L 310 111 60 475 375 130 18 a6 20 25 aa 25 38 26 u5 98 31 55 65 34

1919 (8) 0 1 2 3 4 5 6 7 8 9 10 11 12 13 17 For market supply core the suply cones have to be summed horizontally re. for the same price , quantity will be multiplied by the number of figms.

If w there w are n hunred, firms, then nm Supply cwire is me following & w (1100,65) (1000,55) (900,45 (800,38) 0 200 200 600 800 1000 1200 1400