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Determine the market short-run supply curve

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Problem: A competitive market is made up of 100 identical firms. Each firm has a short-run marginal cost function as follows:

MC=5+0.5Q

Where Q represents units of output per unit of time.

The firm's average variable cost curve intersects the marginal cost at a vertical distance of 10 above the horizontal axis.

i) Determine the market short-run supply curve

ii) Calculate the price that would make 2,000 units forthcoming per time period

A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of RM450. If the firm produced 800 units per day, its total cost would be RM300, and if it produced 500 units per day, its total cost would be RM275.

i) What are the firm's ATC per unit at these three levels of production?

ii) If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? Per time period.

a) Why must normal profits be counted as a cost, according to economists?

b) If the economic profit is zero, a business will shut down. "Do you agree with this statement? Explained.

Reference no: EM132428823

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