Please give the solution to the following problem so that i can resolve similar other. Please describe in detail as i need to understand.
Cornell Pharamaceutical, INc., and Penn Medical , Ltd. supply generic durgs to treat a variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company reveal the following relations between marginal cost and output:
MCc =$10 + $0.004Qc (Cornell)
MCp = $8 + $0.008 Qp (Penn)
The wohole sale market for generic drugs is vigorously price competitive, and neither firm is able to charge a jremium for its products. Thus, P = MR in this market.
Q1. Determine the supply curve for each firm. Express price as a function of quantity and quantity as a function of price. (Hint: Set P = MR =MC to find each firm's supply curve.)
Q2. Calculate the quantity supplied by each firm at prices of $8, $10 and $12. What is the minimum price necessary for each individual firm to supply output?
Q3. Assuming these two firms make up the entire industry, determine the industry supply curve when P<$10.
Give the rationale for each answer.