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Homework answers / question archive / Industry supply curves (denoted S(p)) can be derived easily from the supply curves for individual firms (denoted s;(p) for firm i): simply add the quantity supplied for each firm
Industry supply curves (denoted S(p)) can be derived easily from the supply curves for individual firms (denoted s;(p) for firm i): simply add the quantity supplied for each firm. However, industry supply curves sometimes have kinks if the individual firms have different supply curves, so be sure to consider how many firms will be in the market at any given price. 1st attempt Part 1 (1 point) Suppose that there are three firms in an industry with the following supply functions: si(n) = p 52(p) = 1p 53(p) = 7p. What is the industry supply function? Choose one: O A. S(p) = pif p 7 OB. S(p) = pif p 7 O C. S(p) = 7p O D. S(p) = 9p
Part 2 (1 point) Suppose an industry has two firms with the following supply functions: si(p) = 1p S2(p) = p - 2. What is the industry supply function? Choose one: O A S(p) = 1pif p 2 OB. S(p) = 2p - 2 O C. S(p) = 1p - 2 OD. S(p) = 1pif p 2
Part 3 (1 point) Consider an industry with 52 firms that have identical individual supply functions, s?(p) = p – 4, and 113 firms that have identical individual supply functions, S2(p) = 2p - 6. What is the industry supply? Choose one: O A. S(p) = 0 if p 4 OB. S(p) = 0 if p 4 C. S(p) = 3p – 10 D. S(p) = 278p – 886
Part 1: Answer D
S= s1 + s2 + s3 = p+p+7p = 9p
Part 2: Answer D
S = 1p if p<=2 ( because the supply is always positive)
And S= 1p + 1p - 2 = 2p - 2 (as supply now is always positive and greater than 0)
Part 3: Answer C
Same logic as used in the previous 2 questions. The supply function for respective constraints are arrived by multiplying the individual supply function with the respective number of firms.
