In the short run, a market consists of 100 identical firms. The market price is $8, and the total cost to each firm of producing various levels of output is given in the table below. What will total quantity supplied be in the market?

Question

Quizplus · Accepted Answer

To find the total quantity supplied in the market, we need to sum up the quantity supplied by each firm at the market price of $8. To do this, we need to find the profit-maximizing output level for each firm.

At a price of $8, each firm will produce where marginal cost (MC) equals price (P) as long as P > minimum average variable cost (AVC). Let's calculate the profit-maximizing output level for each firm using this rule.

For Firm 1, MC = $3, which is less than $8, so it will produce where MC = P.
For Firm 2, MC = $5, which is less than $8, so it will produce where MC = P.
For Firm 3, MC = $8, which is equal to $8, so it will produce where MC = P.
For Firm 4, MC = $11, which is greater than $8, so it will not produce anything.
For Firm 5, MC = $15, which is greater than $8, so it will not produce anything.
For Firm 6, MC = $20, which is greater than $8, so it will not produce anything.

Therefore, the total quantity supplied in the market will be the sum of the output levels for the three firms that are producing, which is:
Qs = Q1 + Q2 + Q3
Qs = 40 + 60 + 200
Qs = 300 units

In the Short Run, a Market Consists of 100 Identical