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Each of the 10 firms in a competitive market has a cost function of c=10+q^2 The...

Each of the 10 firms in a competitive market has a cost function of c=10+q^2

The market demand function is Q=420-p

Determine the equilibrium price, quantity per firm, and market quantity

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Homework Answers

Answer #1

the supply curve of an individual firm is equal to the marginal cost function.

MC is a change in the total cost and a change in function found by differentiation.

MC=dc/dq=2q

MC=2q

P=2q ............ the inverse supply curve

2q=P

q=0.5P ......... the normal supply function

market supply is

Q=10*q=5P

Q=5P .......... the market supply

equilibrium is at Qd=Qs

420-P=5P

6P=420

P=70

the equilibrium price is $70

quantity each firm produce at MC=P

2q=70

q=35 units

market quantity is

Q=420-P=420-70=350

the equilibrium price is $70, the quantity each firm is 35 units, the market quantity is 350 units.

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