A competitive industry consists of 100 firms. The short-run marginal cost curve for each firm is given by MC = 200 + .3Q. The demand curve faced by the industry is given as P = 400 - .1Q. What is the equilibrium price and quantity produced by the industry as a whole?
What will be an ideal response?
Price is 350 and industry quantity is 500. The MC curves must be summed into a market supply curve which is MC = 200 - .3Q. This is equated to the demand curve to get the answer.
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