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The market marginal benefit for milk (in gallons) is given by MB = 132 - 8/3925 Q. There are two firms in the market that produce milk. The first firm’s marginal cost curve is given by MC1 = .0003125Q, while the second firm’s marginal cost curve is MC2=.00008Q.
a. What is the equation for firm 1’s supply curve (quantity supplied as a function of price)?
b. What is the equation for firm 2’s supply curve?
c. What is the equation for the market supply curve?
d. What is the equilibrium price and quantity of milk?
e. What are the total benefits to consumers from the equilibrium quantity of milk?
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