00:02
Okay, so the question says in a competitive industry consisting of 5 ,000 firms, the short earn marginal cost curve for each firm is given by.
00:13
It's given by.
00:16
There we go.
00:23
Mc equals 100 plus 22.
00:29
So the demand curve faced by the industry is given as p equals 500 minus 0 .002 q and mc are in dollar tone and q is in tons.
00:51
Okay, so it says find the equilibrium price and quantity sold per industry and each firm.
00:59
Find the b, find the producer and consumer surpluses and the equilibrium price.
01:05
So to find the equilibrium price and quantity sold for the industry and each firm, we need to equate the industry's demand and supply curves.
01:16
In the long run, firms will enter or exit the market until the industry is in equilibrium where the quantity demanded equals the quantity supplied.
01:26
So since the short run marginal cost curve is given for each term, we'll use it to find the supply curve for each firm.
01:36
Okay, so let's see.
01:39
We're going to answer a, equilibrium price and quantity.
01:44
Okay, for the industry, it's going to be the demand curve which is going to be p equals 500 minus 0 .002 q.
01:58
So the total industry quantity demanded or the qd is going to equal to the total industry quantity supplied or the qs.
02:11
So setting the qd equal to the qs, we are going to get 500 minus 0 .002 q equals 200 plus 20 q.
02:26
Now solving for q, we are going to get q is approximately 19 ,999 .4.
02:40
Okay, so now finding the equilibrium price using the demand curve, since we know what p is, we are going to go ahead and plug it in here for q and that's going to equal to p equals, sorry, approximates for 60 .0012 .2.
03:08
Okay, so for each firm, since there are 5 ,000 firms in the industry, we divide the total quantity sold by the number of firms to get the quantity sold per firm.
03:22
So q, we're going to do that here.
03:27
Q divided by number of firms.
03:33
Okay, so 19 ,999 .4 divided by 5 ,000 is going to be approximately 3 .99...