Question

Total Total Product Fixed Cost S150 Total Variable Cost SO 75 150 150 150 150 150 150 150 150 150 150 105 145 200 270 360 475 620 10 800 Based on the cost data given in the accompanying table, which of the price quantity tables correctly represents the firm's short-run supply schedule? (b) (c) DOPOS POP $200 $200 $20 230030030 45 4450 45 4 605 600 60 5 756 75 5 95 7 95 120 120 7 8 1509 150 150 95 120

Answer 1

The given supply schedules shows that market is imperfectly competitive.

A supplier would be willing to supply the good as long as price is greater than marginal cost in case of imperfectly competitive market.

Following is the required marginal cost schedule -

Total product	Total Fixed Cost	Total Variable Cost	Total Cost	Marginal Cost
0	150	0	150	-
1	150	50	200	50
2	150	75	225	25
3	150	105	255	30
4	150	145	295	40
5	150	200	350	55
6	150	270	420	70
7	150	360	510	90
8	150	475	625	115
9	150	620	770	145
10	150	800	950	180

As the above table shows, supplier would be willing to supply 9 units if price per unit is greater than $145 (P >MC) or he will be willing to supply 8 units if price per unit is greater than $115 (P>MC).

The supply schedule in table (b) indicate this scenario.

So,

Price-quantity in table (b) correctly represents the firm's short run supply schedule.

Hence, the correct answer is the option (2) [table b].