Total Product Total Fixed Cost Total Variable Cost 0 $150 $0 1 150 50 2 150...

Total Product	Total Fixed Cost	Total Variable Cost
0	$150	$0
1	150	50
2	150	75
3	150	105
4	150	145
5	150	200
6	150	270
7	150	360
8	150	475
9	150	620
10	150	800

The first table shows cost data for a single firm. Now suppose that there are 600 identical firms in this industry, each with the same cost data. Suppose, too, that the demand curve for this industry is as shown in the second table.

Price	Quantity Demanded
$20	6,800
30	5,975
45	5,500
60	5,125
75	4,500
95	4,200
120	3,600
150	2,400

Based on all these data, the equilibrium price of the product in the market will be

Multiple Choice

$95.
$75.
$120.
$60.

Expert Solution

Answer: $95

Supply curve is same as MC curve. Once you get the MC curve for 1 firm, then aggregate it for 600 firms. This has been shown in the table below.

The formula view of this table is as follows for your reference.

The demand and supply curves are as follows. From this diagram, it seems that $95 is the equilibrium price.

Rahul Sunny answered 1 year ago

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