Suppose that there are 100 identical firms in a market. Each firm has a short-run marginal cost and average variable cost functions given by
SMC = 2+4Q
AVC = 2+2Q.
(a) Determine the supply function of each firm.
(b) Determine the market supply function.
(c) Suppose that the market demand function is given by P = 10 − 0.01Q. Calculate the market equilibrium price and quantity.
(d) Calculate the profit made by each firm.