MGEA02H3 Lecture Notes - Lecture 13: Demand Curve, Economic Equilibrium

• School: UTSC
• Department: Economics for Management Studies
• Course: MGEA02H3
• Professor: Michael Krashinsky

Document Summary

Supply and demand determines the price of goods. Supply curve for the firm: p= marginal cost when quantity is above minimum average variable cost. We assume the firms all have the same supply curve. One over the number of firms shows how much of the industry output is supplied by each firm. For example if there are 50 firms, each firm contributes 2% to the overall output. In this case the value 0. 02 is the coefficient of q(the quantity supplied by the industry as a whole). We sub 0. 02q into the supply curve for the firm to get the supply curve for the industry. Often the number of firms, the supply curve for the firm and the demand curve is given. First find the supply curve for the industry and then make the supply and demand curves equate to find the equilibrium quantity. Note: this quantity(total output) divided by the number of firms is the amount each firm produces.