Firm A is the dominant firm in a market where industry demand is given by QD = 48 - 4P. There are four “follower” firms, each with long-run marginal cost given by MC = 6 - QF. Firm A’s long-run marginal cost is 6.
a. Write the expression for the total supply curve of the followers (QS) as this depends on price. (Remember, each follower acts as a price taker.)
b. Find the net demand curve facing firm A. Determine A’s optimal price and output. How much output do the other firms supply in total?