Question

We've claimed that the efficient way to spread out work across firms in the same industry is to set the marginal cost of production to be the same across firms. Let's see if this works in an example 4. Consider a competitive market for rolled steel (measured by the ton) with just two firms Sd BigCo. If we wanted to be more realistic, we could say there were 100 firms like SmallCo and 100 firms like BigCo, bu that would just make the math harder without generating any insight. The two firms have marginal cost schedules like this: Marginal Cost SmallCo S10 S20 S30 S40 S50 BigCo $10 $10 $10 $10 $20 $30 $40 $50 S70 $80 Total Cost Bigco SmallCo $10 $30 $20