Answered: a. Suppose 24 firms are in this…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 7CQ

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Competition and the Invisible Hand: End of Chapter Problem

Let’s take a look at Invisible Hand Property 2 in action using a mathematical example. Suppose an industry is characterized by the following equations. We’re going to assume that all individual firms are identical to make this problem a little simpler.

Demand: ??=100−2?QD=100−2⁢P
Individual firm's supply: ??=0.5+0.1?qS=0.5+0.1⁢P
Market supply with n firms: ??=?×??=0.5?+0.1??QS=n×qS=0.5⁢n+0.1⁢n⁢P
Individual firm's average cost: ??=5??−5+24.2??A⁢C=5⁢qS−5+24.2qS

a. Suppose 24 firms are in this industry. What is the equation for market supply?

Q_S =

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