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,how much will be produced in the market?

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Quizplus · Accepted Answer

To find the quantity produced in the market, we need to first find the equilibrium price by setting the market demand equal to the total quantity supplied by all firms: 1050 - 50P = Qs = 100q Substituting the equation for STC into the equation for MC, we get: 2q + 1 = ∂STC/∂q = 2q² + 10 Solving for q, we get: q = (² + 9)/2 Substituting this expression for q into the equation for Qs, we get: 1050 - 50P = 100(² + 9)/2 Simplifying and solving for P, we get: P = 21 - 0.2² Substituting this expression for P into the equation for Qs, we get: Qs = 100q = 50² + 450 Finally, substituting this expression for Qs into the equation for market demand, we get: 1050 - 50P = 50² + 450 Solving for ², we get: ² = 20 Substituting this value into the equation for Qs, we get: Qs = 100q = 50(20) + 450 = 1450 Therefore, the quantity produced in the market is 500 (since there are 100 firms each producing 5 units).

Suppose There Are 100 Firms Each with a Short Run