1. A competitive industry is composed of 24 identical firms. Each firm has the following marginal cost of production in the short-run: MC = 58 +8Q. Each firm has the following Total Cost of production in the short-run: TC = 2 + 58Q + 4Q². Demand for the product is given by the following demand curve: Qd = 1,211 - 2P. a. Explain why each firm will produce where market equilibrium price (Pº) equals the firm's marginal cost of production (MC). b. Derive an equation for the industry supply curve (i.e., Q₁ = .....).

1. A competitive industry is composed of 24 identical firms. Each firm has the following marginal cost of production in the short-run: MC = 58 +8Q. Each firm has the following Total Cost of production in the short-run: TC = 2 + 58Q + 4Q². Demand for the product is given by the following demand curve: Qd = 1,211 - 2P. a. Explain why each firm will produce where market equilibrium price (Pº) equals the firm's marginal cost of production (MC). b. Derive an equation for the industry supply curve (i.e., Q₁ = .....).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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