A perfectly competitive firm has the following short-run total cost:
|
Quantity
|
Total Cost
|
AVC
|
ATC
|
MC
|
|
0
|
$5
|
--
|
--
|
--
|
|
1
|
10
|
|
|
|
|
2
|
13
|
|
|
|
|
3
|
18
|
|
|
|
|
4
|
25
|
|
|
|
|
5
|
34
|
|
|
|
|
6
|
45
|
|
|
|
Market demand for the firm's product is given by the following market demand schedule:
|
Price
|
Quantity Demanded
|
Firm Supply
|
Market Supply
|
|
$12
|
300
|
|
|
|
10
|
500
|
|
|
|
8
|
800
|
|
|
|
6
|
1200
|
|
|
|
4
|
1800
|
|
|
a) Calculate this firm's Marginal Cost and, for all output levels except zero, the firm's average variable cost and average total cost.
b) There are 100 firms in this industry that all have identical costs to those of this firm. Derive the SR market supply curve and graph it. In the same diagram, draw the market demand curve. What is the market price, and how much profit will each firm make?