Suppose there are 100 firms each with a short run total cost of STC = q² + q + 10,so that marginal cost is MC = 2q +1.If market demand is given by Q_D = 1050 - 50P,what is the equilibrium price?

Question

Quizplus · Accepted Answer

To find the equilibrium price, we need to find the quantity where the market demand equals the market supply. Since we have 100 firms, the market supply can be found by multiplying each firm's quantity by 100. Thus, the market supply is given by Q_D = 100q² = 100(2MC - 1 - 10) = 200MC - 1000. Setting this equal to the market demand, we have: 1050 - 50P = 200MC - 1000 Solving for P, we get P = 11.

Suppose There Are 100 Firms Each with a Short Run