ECON 2X03 Lecture Notes - Lecture 4: Production Function, Marginal Product, Farad
18 Apr 2013
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The supply function for a firm gives the profit maximizing quantity of output as a function of market price. Found where smc = p and smc is upward-sloping and p>min of avc (if p0. So just set smc = p y/2=p y*=2p. What is the sr supply? y= 5 y=15/2. At y=5, smc = 25-50+45 = 20. So supply function: y* = {0 if p<=105/4 || 5+sqrt(p-20) if p>=105/4} Market supply function (sr): total desired ( -maxing) output in a market as a function of market price. Given a market with n firms with individual supply functions yi*(p) i=1,2, n, the market supply is y*(p)= 100 of them have 4 units of input 2 (which is fixed in the sr).
