Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
Question
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Chapter 12, Problem 12.1P

a)

To determine

To find:The short − run supply curve when q is the function of market price.

a)

Expert Solution
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Explanation of Solution

First find MC from TC function and then equate MC with P.

C(q) = 1300q3+0.2q2+4q+10MC=ΔC(q)ΔqMC=0.01q2+0.4q+4

Now equate MC = P.

MC=0.01q2+0.4q+4P=0.01q2+0.4q+4Thus supply curve, P=0.01q2+0.4q+4Rewrite in q form.q = 10P20

b)

To determine

The short-run industry supply curve need to be computed.

b)

Expert Solution
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Explanation of Solution

Multiply 100 to find the industry supply curve.

q = 10P20q=1000P2000Thus, industrysupply curve:q=1000P2000

c)

To determine

To find:The combination of short run equilibrium price and quantity.

c)

Expert Solution
Check Mark

Explanation of Solution

Given market demand:

Q=200P+8000Now, Qs = Qd1000P2000=200P+80001000P+200P=8000+20001000P+200P=100005P+P=50(5P)2=(50P)225P=2500+P2100PP2125P+2500=0Now solve for the P:P = 25 and P =100 (ignore this )Thus, Price = $25Now find Q:Q = -200(25) + 8000Q = -5000+8000Q = 3000

Thus, equilibrium price and quantity is $25 and 3000 units, respectively.

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