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

Each firm will produce where marginal cost (MC) equals market price. In this case, the MC is given by the last column in the table. We can see that at a quantity of 3, MC equals $8, which is the market price. Therefore, each firm will produce 3 units. Since there are 100 firms, the total quantity supplied in the market will be 300 units (100 x 3).

In the Short Run, a Market Consists of 100 Identical