The Market for Sweet Potatoes Consists of 1,000 Identical Firms $S T C = 100 + 100 q + 100 q ^ { 2 }$

question 68

Multiple Choice

The market for sweet potatoes consists of 1,000 identical firms. Each firm has a short-run total cost curve of $S T C = 100 + 100 q + 100 q ^ { 2 }$ , and a short-run marginal cost curve of $S M C = 100 +$ $200 q$ where $q$ is output. What is the equation of an individual firm's short-run supply curve in this market?

• A) \(q = P / 200 ^ { - .5 }\)
• B) \(q = P / 100 - .5\)
• C) \(P = 100 + 200 q\)
• D) \(q = P / 200 - .5\) for \(P \geq 100\), and \(q = 0\) otherwise.

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Definitions:

Supply Equation

A mathematical expression that represents the relationship between the quantity of a good that producers are willing to sell and factors that affect this quantity like the price of the good.

Shortage/Surplus

A market condition where the quantity demanded is greater/smaller than the quantity supplied, leading to a scarcity/excess of goods.

Price Ceiling

A legally imposed maximum price on goods or services, preventing prices from rising above a certain level.

Shortage/Surplus

A situation where the quantity of a good demanded exceeds the quantity supplied (shortage) or the quantity supplied exceeds the quantity demanded (surplus).