Problem
Consider a competitive market in which the market demand for the product is expressed as P = 75 - 1.5Q, and the market supply of the product is expressed as P = 25 + 0.50Q.
Price, P, is in dollars per unit sold, and Q represents rate of production and sales in undreds of units per day. The firm A in this market has a marginal cost of MC = 2.5 + 10q.
1. Determine the equilibrium market price and rate of sales (quantity).
2. Determine the firm A's total sales (supply quantities), given your answer to part (1) above.
3. If the market demand were to increase to P=100 - 1.5Q, what would the new price and rate of sales in the market be? What would the new total sales of the firm A (firm A's supply) would be?