An industry has 100 firms.These firms have identical production functions.In the short run, each firm has fixed costs of $200.There are two variable factors in the short run and output is given by y =(min{x1, 4x2}) 1/2.The cost of factor 1 is $5 per unit and the cost of factor 2 is $5 per unit.In the short run, the industry supply curve is given by
A) Q = 100p/12.5.
B) Q = 100p/10.
C) Q = 580p1/2.
D) the part of the line Q = 50(min{5, 20}) for which pQ > 200/Q.
E) None of the above.
Correct Answer:
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