New England Textiles, Inc., is a medium-sized manufacturer of blue denim that sells in a perfectly competitive market. Given $25,000 in fixed costs, the total cost function for this product is described by:
TC = $25,000 + $1Q + $0.000008Q2
MC = ∂TC/∂Q = $1 + $0.000016Q
Where Q is square yards of blue denim produced per month. Assume that MC > AVC at every point along the firm’s marginal cost curve, and that total costs include a normal profit.
A. Derive the firm's supply curve, expressing quantity as a function of price.
B. Derive the market supply curve if New England Textiles is one of 500 competitors.
C. Calculate market supply per month at a market price of $2 per square yard.

  • CreatedFebruary 13, 2015
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