Discussion:
The chair-making industry currently consists of 90 producers, all of whom operate with the identical short-run total cost curve STC(Q)=500+3Q2, where Q is the annual output of a firm. Only $200 of each firm's fixed cost is sunk. The market demand curve for lamps is D(P)=2880-P, where P is the market price.
a) What is the marginal cost curve for each firm?
b)Compute the individual firm's shutdown price
c) What is the individual firm's short-run supply curve? [Write the formula(s) for quantity as a function of price.]
d) What is the short-run market supply curve? [Write the formula(s) for quantity as a function of price.]
e) Determine the short-run equilibrium price, total market quantity, and quantity per firm in this industry