Assume quantities need not be integers. Market demand is MWTP=80-Q. Each firm in a constant-cost industry...
Assume quantities need not be integers. Market demand is
MWTP=80-Q. Each firm in a constant-cost industry has total costs
and marginal costs are MC(q)=40+10q. If there are currently 10
firms in the market, what is short-run
equilibrium price? Enter a number only, no $ sign.
Homework Answers
Answer
the individual firm supply curve is the MC curve
MC=40+10q
P=40+10q
converting to normal form
10q=40+P
q=-4+0.1P
the market supply is
Q=q*10=40+P
Q=-40+P
converting to the inverse supply of market
P=Q+40
equating with demand
80-Q=Q+40
2Q=40
Q=20 units
P=80-20=60
the price is $60
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Assume quantities need not be integers. Market demand is
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