Wooden tables are produced in a perfectly competitive market.

Each firm has a short-run total cost curve of = 3 − 12 2 + 100 + 1000, where quantity is measured in number of tables per day.

The marginal cost of production is given by = 3 2 − 24 + 100.

• Q1 Calculate the price below which a firm in the market will not produce any output (the shutdown price).
• Q 2 [7 marks] Assume that the industry for flour tortillas in Denver is perfectly competitive. There are 200 firms. 75 of the firms are “high-cost,” with short-run supply curves QHC = 5P, while the others are “low-cost,” with short-run supply curves QLC = 8P. Quantities are measured in dozens of tortillas and prices in dollars Answer the following questions:
• A. Derive the short-run industry supply curve for tortillas [2 marks]
• B. Assume the market demand curve for tortillas is given by QD = 10,000 – 625P. Find the market equilibrium price and quantity. [1 mark]
• C. At this price, how many dozens of tortillas are produced by the high- and low-cost firms, respectively? [2 marks]
• D. Determine total industry surplus at the equilibrium. [2 marks]