Question

In a perfectly competitive market, the market supply curve is a. the vertical sum of all the individual firms' supply curves. b. always a horizontal line. c. the marginal cost curve above average total cost for a representative firm. d. the horizontal sum of all the individual firms' supply curves.

Answer 1

Q1
Answer
Option d
The market supply curve is a horizontal sum of individual supply curve as it is the quantity supplied by market in total at each price.
====
Q2
Answer
Option a
The firm produces at MC=P=MR
at Q=5, MR=5 and MC is
MC(n)=TC(n)-TC(n-1)
MC(n)=marginal cost of n th unit
TC(n)=Total cost of n units of output
MC(5)=23-17=$6
MR<MC
but at 4 units
MC(4)=17-12=5
so the firm should produce 4 units to maximize profit.