Answer
a) Please see the table.
b) 500 total units supplied, 5 units per producer
c) Prices will fall, the quantity demanded will rise, and the quantity supplied by each firm will fall.
d) Please see the graph.
Work Step by Step
a) The table shows the marginal cost and average total cost for each quantity.
b) Each firm produces until their marginal cost exceeds their price. The 5th unit has a marginal cost of 9 dollars, and the 6th unit has a marginal cost of 11 dollars. Thus, producers will supply five units.
$5*100=500$
c)
$5*10=50$
$50-41=9$
Each firm is making 9 dollars profit. Since firms are enjoying profit, more firms will enter the market (and drive down profits).
d) The supply curve will be horizontal at the price ($P_{0})$ since the price will be the minimum point on the average total cost curve. Additionally, the minimum point on the average total cost curve will be where the marginal cost curve intersects the average total cost curve.
