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# Deriving short run supply curve

Carolina Textiles, Inc., is a small manufacturer of cotton linen that it sells in a perfectly competitive market. Given \$100,000 in fixed costs per day, the daily total cost function for this product is described by:

TC = \$100,000 + \$2Q + \$0.0625Q2

MC = dTC/dQ = \$2 + \$0.125Q

where Q is units of cotton linen produced per day. Assume that MC > AVC at every point along the firm's marginal cost curve, and that total costs include a normal profit.

A. Derive the firm's supply curve, expressing quantity as a function of price.
B. Derive the market supply curve if North Carolina Textiles is one of 1,000 competitors.
C. Calculate market supply per day at a market price of \$47 per unit.

#### Solution Preview

A. Derive the firm's supply curve, expressing quantity as a function of price.

A perfectly competitive firm sets its output level such that Marginal ...

#### Solution Summary

Solution describes the steps to find short run supply curve of a firm and market in the perfectly competitive market.

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