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    Deriving short run supply function

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    The Magazine Delivery Company is a typical firm in the perfectly competitive magazine delivery business. The company delivers magazines and stocks magazine racks at convenience stores located throughout the state of Kentucky. Marginal costs of service are described by the relation:

    MC = $5 + $0.4Q

    where Q is racks of magazines delivered and serviced per week.
    A. Derive the firm's supply curve, expressing quantity as a function of price.
    B. Derive the market supply curve if the company is one of 200 competitors.
    C. Calculate market supply per week at a market price of $25 per rack delivered and serviced.

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    Solution Preview

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

    In perfectly competitive environment, a firm sets its output such that ...

    Solution Summary

    The solution describes the steps to derive short run supply functions for the given firm and market.

    $2.19

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