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MrGrimey MrGrimey
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Posts: 336
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6 years ago
Suppose the following information is known about a market:

1.   Sellers will not sell at all below a price of $2.
2.   At a price of $10, any given seller will sell 10 units.
3.   There are 100 identical sellers in the market.

Assuming a linear supply curve, use this information to derive the market supply curve.
Textbook 
Microeconomics: Theory and Applications with Calculus

Microeconomics: Theory and Applications with Calculus


Edition: 4th
Author:
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#1
6 years ago
First, Q = 100q since all firms are identical. This gives two points: (p = 2, Q = 0) and
(p = 10, Q = 1000). From the first point, it is known that p = 2 + bQ. When Q = 1000,
10 = 2 + b(1000). Solving for b yields b = .008. Rearranging to solve for Q yields:
Q = -250 + 125p or P = 2 + .008Q.
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