Consider a perfectly competitive market. Right now we have two types of firms. Firms using technology A and firms using technology B. There are 10 firms of type A and 20 firms of type B. The Marginal Cost function for firms with technology A is given by MCA (A) = 5+2qA. In addition, these firms have to pay a fixed cost of $64. The Marginal Cost function for firms with technology B is given by MCB (B) = 10+qB. In addition, these firms have to pay a fixed cost of $50. (a) What is the short run supply curve for each type of firm? (b) What is the Market Supply curve? (c) Suppose that Market price is $15. How much does each type of firm supply?
Consider a perfectly competitive market. Right now we have two types of firms. Firms using technology A and firms using technology B. There are 10 firms of type A and 20 firms of type B. The Marginal Cost function for firms with technology A is given by MCA (A) = 5+2qA. In addition, these firms have to pay a fixed cost of $64. The Marginal Cost function for firms with technology B is given by MCB (B) = 10+qB. In addition, these firms have to pay a fixed cost of $50. (a) What is the short run supply curve for each type of firm? (b) What is the Market Supply curve? (c) Suppose that Market price is $15. How much does each type of firm supply?
Chapter1: Making Economics Decisions
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Transcribed Image Text:Consider a perfectly competitive market. Right now we have two types of firms. Firms using technology A and
firms using technology B. There are 10 firms of type A and 20 firms of type B.
The Marginal Cost function for firms with technology A is given by MCA (A) = 5+2qд. In addition, these
firms have to pay a fixed cost of $64.
The Marginal Cost function for firms with technology B is given by MCB (9B)
firms have to pay a fixed cost of $50.
10+qB. In addition, these
=
(a) What is the short run supply curve for each type of firm?
(b) What is the Market Supply curve?
(c) Suppose that Market price is $15. How much does each type of firm supply?
(d) Suppose that Market price is $25. What is Marginal Cost of the last unit supplied for each type of firm?
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