Suppose the inverse industry supply curve is given as = 5 + (10/n)q

where n is the number of firms that are in the industry and q is industry output. Suppose the inverse industry

demand is given as p = 20 ? q.

(i) Draw the inverse industry supply curve when there are n=1,2,3,4,5 on the same

diagram. Also draw the inverse industry demand on the same diagram.

(ii) Determine the equilibrium industry price and total industry quantity supplied when

there are n=1, n=3, and n=5 firms algebraically.

(iii) Comment on what happens to the equilibrium market price as the number of firms

enters the industry.

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