Figure 14-8
In the figure below,panel (a)depicts the linear marginal cost of a firm in a competitive market,and panel (b)depicts the linear market supply curve for a market with a fixed number of identical firms.
-Refer to Figure 14-8.If there are 600 identical firms in this market,what is the value of Q1?

Question

Figure 14-8
In the figure below,panel (a)depicts the linear marginal cost of a firm in a competitive market,and panel (b)depicts the linear market supply curve for a market with a fixed number of identical firms.  
-Refer to Figure 14-8.If there are 600 identical firms in this market,what is the value of Q1?

Quizplus · Accepted Answer

In a competitive market, the market supply is given by the sum of individual firms' quantities at each price. In panel (b), the market supply curve is upward sloping, indicating that as the price increases, the quantity supplied by the firms in the market also increases. At price P1, the market supply is equal to Q1. In order to find Q1, we need to identify the quantity supplied by each firm at price P1. From panel (a), we can see that at price P1, each firm will supply Q* units. Therefore, the quantity supplied by 600 identical firms at price P1 is: 
Q1 = 600 * Q* = 600 * (P1 - MC) = 600 * (40 - 10) = 30,000 
Thus, Q1 = 30,000, which is equivalent to choice C.