Answered: The following problem traces the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market. a. Complete the following table for a single firm in the short run.

Using the information in the table, fill in the following supply schedule for this individual firm under perfect competition and indicate profit (positive or negative) at each output level. (Hint: At each hypothetical price, what is the MR of producing 1 more unit of output? Combine this with the MC of another unit to figure out the quantity supplied.)

$150 $0
150
1
150
40
190
40
190
40
2
150
100
250
50
125
60
3
150
180
330
60
110
80
4
150
280
430 70
107.5
100
5
150
400
550
80
110
120
150
560
710
93.33 118.33 160
7
150
760
910 108.57 130
200
8.
150
1000 1150 125
143.75 240
9.
150
1300 1450 144.44 161.11 300
10
150
1850 2000 185
200
550

PRICE QUANTITYSUPPLIED PROFIT
$ 40
70
110
140
180
220
260
400
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Follow-up Question

Now suppose there are 100 firms in this industry, all with identical cost schedules. Fill in
the market quantity supplied at each price in the market.

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