Question

Consider an industry in which only three sellers operate. Their supply curves are given by

?1(?)=?−10

?2(?)=?−12 and,

?3(?)=?−14

The market supply presents _____________    kink(s).

Part 2

Suppose the market price equals $15 per unit. A total of _____________   unit(s) will be supplied in this market.

Answer 1

Solution:

1):-

When S1 = 0, p = 10

When S2 = 0, p = 12

When S3 = 0, p = 14

Since market supply is horizontal summation of individual supply curves.

The market supply presents 3 kink(s)

2):-

When p = 15, All the three sellers (seller 1, seller 2, seller 3) will supply, All three sellers has maximum acceptable price of 10 , 12 and 14 respectively.

For sellers 1:

S1 = 15 - 10 = 5 units

For seller 2:

S2 = 15 - 12 = 3 units

For seller 3:

S3 = 15 - 14 = 1 unit

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