Suppose there are 100 identical firms in the rag industry,and each firm is willing to supply 10 rags at any price.The market supply curve will be a(n)
A)vertical line where Q = 10.
B)vertical line where Q = 100.
C)vertical line where Q = 1000.
D)horizontal line where Q = 1000.

Question

Quizplus · Accepted Answer

Since each of the 100 firms supplies 10 rags, the total market supply is 100 firms * 10 rags/firm = 1000 rags. A vertical supply curve would imply that the quantity supplied does not change with price, which is not the case here. The correct interpretation is that the total quantity supplied to the market is fixed at 1000 rags, regardless of price, indicating a misunderstanding in the explanation. The correct depiction of a market where suppliers are willing to supply a fixed quantity regardless of price would actually be a horizontal line, reflecting that the quantity supplied remains constant across different prices. However, the scenario described suggests that the total quantity supplied to the market by all firms combined is 1000 rags, but it does not specify how this quantity changes with price, leading to a misinterpretation in the initial explanation. The correct answer, based on the information given, should indicate that the total supply is 1000 rags, but the nature of the supply curve (whether it's vertical or horizontal) in this context was misinterpreted. The supply curve in such a context, where each firm is willing to supply a certain quantity at any price, would typically be represented as horizontal, indicating that the quantity supplied is fixed and does not change with price, which contradicts the explanation provided.

Suppose There Are 100 Identical Firms in the Rag Industry,and